JULY 2 , 2012
171.25
+8.20
2,301.00
+71.00
21.01
+0.48
96.98
+5.62
83.87
+6.18
CURRENCY BUYING CENTRAL SELLING CFA KRONER EURO POUNDS RIYAL SDR FRANC DOLLAR WAUA RENMINBI
0.2758 26.0161 193.4361 241.9849 41.3049 234.5802 161.0124 154.91 233.4871 24.343
0.2858 26.1001 194.0605 242.766 41.4383 235.3374 161.5321 155.41 234.2407 24.4221
0.2958 26.184 194.6848 243.547 41.5716 236.0945 162.0518 155.91 234.9943 24.5011
CBN Exchange rate as at 29/06/2012
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n the last couple of months, the Nigerian telecommunications sector has been embroiled in near crisis. Hardly any week passed within the period without a dispute between the telecommunications operators and one agency of the government. First it was the National Environmental Standards Regulatory Enforcement Agency, NESREA, going to seal one of MTN Nigeria’s facilities in Abuja, sometime in April, over alleged non-compliance to set standards. Nigerian Communications Commission, NCC, felt that NESREA went too far in exercising that function without recourse to it as the telecoms regulator in the country. Based on that, the regulator, a few days after, unsealed the facility warning NESREA not to encroach on telecoms territories without clearance from it. However, two days after this, NESREA felt that the onus of setting standards involving the distance an operators should set its BTS from living homes fell within the environmental protection laws, called the bluff of the NCC and re-sealed the facility. This brought a stalemate which lasted for several weeks in the industry and put a lot of telecoms subscribers out of service while the tussle lasted. Financial Vanguard gathered that it took the efforts of some committees in
New Group Managing Director, NNPC, Mr. Andrew Yakubu, briefing journalists after a Presidential briefing on the new Petroleum Industry Bill at the Presidential Villa, Abuja. Photo by Abayomi Adeshida
Crises in telecom sector:
The FDI implications BY PRINCE OSUAGWU the National Assembly and other top government functionaries to quell the matter, even though a permanent solution was not attained. Barely a week after this incident, another crisis broke out. The regulator itself fell out with the operators after discovering in May 2012, that the operators did not meet the agreed Key Performance Indicators, KPI, for the months of March and April. The KPI was set to monitor the quality of service rendered to the Nigerian subscribers.
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our major Operators - MTN Nigeria; second national operator, Globacom; Airtel Nigeria and; Etisalat - fell under the hammer of the regulator which slammed a collective N1.17 billion fine ($7.3m) on them. The regulator also gave a stipulated time of two weeks for the operators to pay up the fine or risk additional N2.5million penalty that would attract every single day of default. The NCC said it had arrived at the decision on testing the operators on four parameters – Call Set-up
Success Rate, Call Completion Rate, Drop Call Rate and Traffic Channel Congestion. The commission said the telecoms companies have failed to meet with the minimum standard of quality of service, From the breakdown, MTN and Etisalat were fined N360million ($2.2 million) each, while Airtel and Globacom were fined N270million ($1.7 million) and N180million ($1.1 million) respectively. They were given up till May 25 to pay the fine or get additional N2.5million ($15, Continues on page 18 C M Y K
18 — Vanguard, MONDAY, JULY 2, 2012
Cover Story
Crises in telecom sector 520) daily as contravention charges While the regulator believed it was keeping the operators on their toes to comply with the rules and as well provide quality services, the operators felt victimised, arguing that poor service quality was due to poorly developed infrastructure in the country. Some described the NCC action as killing the goose that lay the golden egg. For as long as the issue lasted, it divided the sector into two parts with some on the part of the regulator and
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Fears over FDI impacts
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lthough the operators have paid the fine, indications are that paid grudgingly.
“There is no institution that is insulated against failure. No matter how we feel that the telecoms industry in Nigeria is growing, we must also understand that it is fragile and could collapse if not properly managed.
others on the part of the operators. In a recent chat with a prominent Nigerian ICT stakeholder and CEO of systems network company, Signal Alliance, Mr Collins Onuegbu, he cautioned that the issue of service provision in the country should not be treated as an isolated case since everything works together for a better service provision. “I would not be in a haste to condemn the operators for poor quality of service because I know that some of the infrastructure they need to get their services to the optimum are not there yet. They are complaining of poor electricity supply, bad road networks, incessant fibre cuts during road maintenance and vandalisation of their facilities among other things. Unless we can all agree that these things are not so, otherwise we need to be patient with them” However, a group of ICT media professionals, under the aegis of ICT Magazine Publishes Alliance, did not see it as just that. The group felt that the operators should pay whatever fine the NCC imposed on them, arguing that the regulator had given enough support and grace period for the operators to brace up their services in the past ten years The group articulated its views in an advertorial that was published in several newspapers in the country. However, penultimate week, the news came round C M Y K
that the operators have paid the fine. Confirming the payment, NCC’s Director of Public Affairs, Mr Tony Ojobo, admitted that the operators have paid the fine, adding that it was also resolved that both the operators and the regulator would sit together and look at the KPI once again to fine tune the prescriptions.
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Moments before the payment, Chairman of the Association of Licensed Telecom Operators of Nigeria, ALTON, Engr Gbenga Adebayo, cried out against the impact of these disagreements on Foreign Direct Investments in the sector. For Adebayo, “there is no institution that is insulated against failure. No matter how we feel that the telecom industry in Nigeria is growing, we must also understand that it is fragile and could collapse if not properly managed. That is why I am of the opinion that no regulator, no authority should make a decision and say it is final. Telecoms itself is dynamic and we should be dynamic in taking decisions concerning it. If the two sides stick to their guns, the regulator at the worst decision may withdraw the operators’ licenses and that would kill the national network, taking us many years behind. “What many economies of the world are doing today is collaboration to ensure that no development in the sector is lost on their economies. There are so many opportunities in the Nigerian market, that can attract more Foreign Direct Investments. But I am afraid that the way we are going, not only in Nigeria, but in Africa as a whole, there may be some hesitations before investors plunge their investments here now, unless we quickly address issues
together.”
CTO agrees with Adebayo
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s if it had read Adebayo's mind, CommonWealth Telecommunications Organisations, CTO, agreed no less. Delivering a paper in Lagos recently, at an event organised by Nigerian Academy of Engineering, CTO’s Chief Operating Officer, Mr Bashir Patel, noted that Nigeria does not have to re-invent the wheel because to grow the technology, sharpen the competitive edge and move from economic growth to economic development, the decision makers at federal, state and local governments, industry, academia and the press need to make a fundamental shift in their thinking. Patel said that, taking a critical look at the global drivers of ICT growth, African perspective, Nigerian ICT today has its obstacles and challenges in a lecture titled “Telecommunications Technology and Infrastructure: The Pivot of National Economic Advancement”. Many other stakeholders also believe that this is not the time for Nigeria to relax on the pillar of being the fastest growing telecoms market in the world at the moment but to brace up to sustain the tempo, especially as everything is going mobile. Perhaps, their arguments are based on facts about the growth of Nigerian telecoms market which has not been disproved either in Africa or in other global markets.
ECONOMIC IMPACTS OF ICT GROWTH
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n terms of growth, Nigeria is ranked the largest and fastest growing ICT market in Africa and among the ten fastest telecoms growth markets in the world. This is as a result of its robustness to return on investments. Obviously, Nigeria’s telecommunications sector, drives the entire ICT industry. Despite that the I n t e r n a t i o n a l Telecommunications Union (ITU) stated in the Internet World Stats that Nigeria had the most Internet users per 100 people on the continent Continues on page 39
Youth restiveness and unemployment in Nigeria: The way out (part 5)
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he Minister of State for Education, Chief Nyesom Wike, has said the Federal Government will invest in technical and vocational education to create about one million jobs through collaboration with educational institutions in Taiwan, South Korea and United Kingdom to create access to functional vocational education for Nigerian youths. He says the focus is to use technical and vocational education to create jobs for Nigerian youths The World Bank advocates a “three-lens approach” to youth empowerment involving • Working for youth as beneficiaries • Engaging youth as partners • Supporting youth as leaders According to the World Bank, policymakers should frame correct social as well as economic policies based on these “youth lenses”. To bring this about requires the following broad initiatives: Changing the Policy Environment: The policymakers need to expand access to and enhance the quality of education and health services. The policymakers need to give young people a voice to articulate the kind of required assistance and the opportunity to participate in the delivery of assistance policies. Develop Youth Capabilities: To help the young people to choose the best from these opportunities, policymakers need to develop the youth’s capabilities. To do this, the policymakers first have to recognize the youth of their country as a strategic resource and vital decisionmaking agents. They also need to make sure that the youth are well-informed, sufficiently resourced and judicious while making their decisions. Provide Second Chances: The policymakers have to provide the young people with an effective system wherein they should grant the youth with second chances. For this, they have
to implement target programs that would provide hope to the younger people as well as provide them incentives to positively reshape their destinies. Increase Investment in Youth: If done properly, investment in youth especially during the five life transitions of youth will develop, safeguard and put in place proper human capital. As the youth undergo each transition from learning, work, health, family and citizenship, public policies and investments in youth can determine their directions and can prevent the youth from going off-track especially when there are economic crises and markets
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Continued from page 17
To help the young people to choose the best from these opportunities, policymakers need to develop the youth’s capabilities.
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do not provide sufficient economic opportunities. Create a Productive Working Life: Once youth obtain the necessary skills, it is important to deploy those skills. This should be done by framing policies and implementing programs that would benefit the rich and poor so that there is fair and even competition. The states have to realize that freeing up their economy to foreign investment not necessarily restricts their role but in fact increases their role in the economic affairs. The policies that open up the economy will become youth friendly only if the government is able to direct proper resources towards the youth and provide them access to jobs that are created due to liberalization of the economy.
Vanguard, MONDAY, JULY 2, 2012 — 19
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he changes at the NNPC last week Tuesday can best be described as cosmetic. Sacking the executive management of NNPC and replacing them with the same old stock of management amounts to scratching the surface of the monumental and colossal fraud in the corporation. President Goodluck Jonathan on Tuesday approved the sack of the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Austen Oniwon, and the executive directors of the NNPC. He also approved the appointment of Andrew Yakubu as the new helmsman of the corporation. The change of the NNPC management team was Director (Refineries & disclosed as usual in a press Petrochemicals); Dr. Attahir B. statement signed by the Yusuf, G r o u p E xecutive Special Adviser to the Director (Commercial & President on Media and Investments); Dr. David Ige, Publicity, Reuben Abati. The Group Executive Director (Gas president also approved the & Power)” appointment of Victor Briggs resident Jonathan as the new Managing Director commended the of the Nigerian Petroleum Development Company outgoing directors for their service to the nation and (NPDC). According to the statement, urged the new management the decision to restructure the team to be fully committed to NNPC was in a bid to rapidly implementing the strengthen the on-going critical interventions needed reforms and transformation of to positively transform Nigeria’s Petroleum sector. Nigeria’s petroleum industry. A corporation which Part of the statement reads: “In furtherance of efforts to executives are due for achieve greater transparency retirement and have been and accountability in asked to leave can not serve government, President as part of the on going reform Goodluck Ebele Jonathan has in the industry. The removal approved the re-composition of the executive management of the executive management of the NNPC can not qualify team of the Nigerian National as restructuring of the Petroleum Corporation organisation as the President (NNPC) as follows: Engineer wants us to believe. NNPC, according to KPMG Andrew Yaku b u , G r o u p Managing Director; Mr. report, has severely defrauded Bernard O.N. Otti, Group Nigeria in subsidy claims. Executive Director (Finance Auditors found that between and Accounts); Engineer Abiye 2007 and 2009 alone, NNPC Membere, Group Executive over-deducted funds in Director (Exploration and subsidy claims to the tune of Production); Dr. Peter S. N28.5 billion. It has not been Nmadu, Group Executive able to account for the sum Director (Corporate Services); ever since. The overEngineer Anthony deduction from its remittance Ogbuigwe, Group Executive to the federation account for
Cosmetic changes in NNPC, PIB is the answer
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2010 and 2011, believed to be in several billions of naira, is not captured in the report. The Federal Government, through the Federal Ministry of Finance, hired KPMG and another Nigerian auditing firm, S.S. Afemikhe & Co., in July 2010, to look into the books
What informed Nigerians are asking this government to do is to ensure the passage of the Petroleum Industry Bill. In the bill, NNPC will be just any other operator in the system
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of the corporation following allegations of “ wrongful deductions at source by the NNPC to fund its operations” by the 36 state governors. There were also concerns at the time that “the procedures for managing and reporting the country’s crude oil and gas revenues are opaque and characterized by gaps, overlaps and inconsistencies in the role of key parties responsible for the assessment, collection and reporting on these revenue
streams.” Officials of the Petroleum Ministry and NNPC, developed cold feet after the auditors were sent in, and indeed tried hard to frustrate the representatives of the two audit firms by failing to supply evaluation criteria for commercial bids submitted in respect of petroleum products importation. Instead of seriously addressing these problems, government has always fired the management of the corporation without any meaningful result. NNPC has had about five GMDs in the last five years, an average of one GMD per year. After only May 18, 2010, 41 days in office, Malam Shehu Ladan was removed as GMD by President Goodluck Jonathan. He was replaced by then NNPC’s Group Executive Director, Refineries and Petrochemicals, Mr. Austin Oniwon, who himself was retired Tuesday last week. Jonathan was the one who ordered a comprehensive audit of the NNPC. No reason was given then for Ladan’s removal. But after the subsidy probe revelations, Nigerians now know why NNPC management do not last a while in office. Jonathan had at the time directed Olusegun Aganga, then Finance Minister, to engage the services of “a world class auditing firm to carry out an audit of the NNPC.” The audit
report of KPMG has long been submitted. It accused the corporation of under-hand dealing and massive corruption. So far, nothing serious has come out of it. If the removal of Oniwon and his team, just like his predecessors, is meant to placate Nigerians that something is being done by this government about the KPMG report and the subsidy probe findings, the appointment of operators from within the NNPC who have been part and parcel of the deals going on in the corporation is to say the least ill advised. Nobody is interested in the sack.
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hat informed Nigerians are asking this government to do is to ensure the passage of the Petroleum Industry Bill. In the bill, NNPC will be just any other operator in the system. It will be stripped of its regulatory powers. For goodness sake, NNPC can not be an operator and the same time a regulator. No matter the reforms going on in the petroleum industry, no serious investor will come into the sector to compete with its regulator. There must be a level playing field. Government must remove its invincible finger encouraging massive corruption in NNPC. This government should please get serious about its transformation agenda. The corruption in NNPC will not go away unless it is privatised or run as a profit making entity without government involvement.
BUSINESS & ECONOMY
Nigerian economy offers opportunities for American investors T
he Nigerian economy has undergone significant reforms to attract investment, particularly from the United States of America, says Central Bank of Nigeria’s Deputy Governor, Financial System Stability, Dr. Kingsley Moghalu. Speaking at a forum he facilitated at the Wharton School of Business recently, Philadelphia, United States of America, Dr Moghalu said that opportunities abound to invest in Nigeria’s burgeoning sectors of education, health, manufacturing and agriculture. While alluding to the multibillion Naira Small and Medium Enterprises Credit
Guarantee Scheme (SMECGS), Nigerian Incentive – based Risk Sharing System for Agricultural Lending (NIRSAL), Commercial Agricultural Credit Scheme (CACS) and other initiatives aimed at jump-starting the economy, Dr Moghalu noted that: “There are lots of opportunities, but these opportunities are held back by issues of access to finance – and that is why the Central Bank of Nigeria has stepped in very strongly to support small businesses through a number of interventions in the areas of agriculture and credit guarantees and so, the process is improving.”
Dr Moghalu conceded that shortage of electrical power supply, lack of modern transportation system and other infrastructural deficit could have added to the cost of doing business in Nigeria,
saying that these are being addressed by the reforms in other sectors of the economy. He also stated that the country remained a viable market for entrepreneurs, and reminded his audience that: “Nigeria
has a huge market of 160 million people, and there is a growing middle class, and so there is a strong opportunity to invest in Africa and Nigeria.”
Lending agencies urge WTO ‘trade facilitation’ pact
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he heads of the World Bank and other international lending agencies have urged countries to salvage an agreement to help poor nations increase trade from the remains of failed world trade talks that began in 2001. “More than a decade after the launch of the Doha Round, this agreement could be a down payment on the commitment WTO (World
Trade Organization) members have made to linking trade and development,” World Bank President Robert Zoellick and the heads of five regional development banks said. One part of the Doha round of world trade talks was a “trade facilitation” pact aimed at reducing red tape and other border delays that boost the cost of doing business. Despite
disagreements that blocked an overall Doha round deal, “the outlines of a new WTO trade facilitation agreement are already clear,” the bank chiefs said. However, developing countries want a credible commitment from richer countries “to support implementation costs such as technical assistance and capacity building,” they said. C M Y K
20 — Vanguard, MONDAY, JULY 2, 2012
Business & Economy BRIEFS Net inflow of foreign exchange stands at $1.49bn
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he Central Bank of Nigeria (CBN) has said that the foreign exchange net inflow in April was 1.49 billion dollars (N2.3 trillion). The bank disclosed this in its monthly economic report for April. It said that foreign exchange inflow and outflow in the month were 3.24 billion dollars (N5.02 trillion) and 1.75 billion dollars (N2.71 trillion), respectively. The CBN said that the net inflow of 1.49 billion dollars (N2.3 trillion) in April was against net inflow of 1.36 billion dollars recorded in March. It also said that the April figure showed an increase of 29.9 per cent above the level in the corresponding period in 2011.
Brent oil, U.S. crude hold gain, then rise more after data
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rent oil and U.S. crude futures initially held and then extended gains. The second rise occurred after reports showed that U.S. final first-quarter GDP growth was unchanged from the prior estimate and that initial jobless claims fell, Brent August crude was up 15 cents at 93.65 dollars a barrel, having traded from 92.41 dollars to 93.85 dollars. U.S. August crude was up 51 cents at $80.72 a barrel, having traded from 79.75 to 80.82 dollars
Labour leader wants FG find solution to NITEL problems The Senior Staff Association of Communications, Transport and Corporations (SSACTAC) has urged the Federal Government to find a lasting solution to the problem of the Nigerian Telecommunications Ltd. (NITEL). The SSACTAC President, Mr Adetunji Adesunkanmi, made the appeal in Lagos. He was reacting to the House of Representative’s rejection of a motion which sought to privatise NITEL. The motion had desired the House to mandate its committee on communications to recommend how the former telecommunications giant would be unbundled. C M Y K
CIBN , Meomorandum Understanding ( MOU )With Lagos State Polytechincon ACIB/ HND Linkage Programme held at CIBNHouse Lagos Pix L- R Dr. Adebayo Aboyemi -Cole, Dean School of Management & Business Studes Lagos State Polytechinc, President / Chairman of Council CIBN and Dr. Uju. M. Ogubunka Registrar CIBN Photo By Diran Oshe
FG, EU sign N43bn financing agreement to support reform programmes By CHRIS OCHAYI
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he Federal Government has signed a Financing Agreements with European Union, EU, for five European Union-funded projects valued at N43 billion to support the federal government’s reform efforts in the areas of justice, water supply and sanitation, electoral cycle as well as fight against drugs and related organised crime. Minister of National Planning Commission, NPC, Dr. Shamsuddeen Usman, signed the agreement on behalf of the government, while Ambassador and Head of Delegation of the European Union to Nigeria and ECOWAS, H.E. Dr. David MacRae signed for the European Union. The signing ceremony followed a similar event on 19 March 2012, during which the financing agreement for a project supporting the fight against corruption in Nigeria was signed. The project on water supply and sanitation sector reform programme phase 11 (WSSSRP-11) is valued at 97 Million Euros while the support to the Federal Government Reform Programme (SUFEGOR) and support to electoral cycle have a contract value of 20 million Euros each. The justice sector project which is worth 27 Million Euros (about N5.3billion) will contribute towards improving
the effectiveness, accessibility, accountability, transparency and fairness of the justice system, while 36 million Euros is dedicated to support the fight against drugs and organised crime. Speaking at the signing ceremony, NPC Minister described the two projects as remarkable and also fully aligned to the Government’s vision 20:2020 as well as the present administration’s reform agenda in both its broad and specific terms. Dr. Usman also said that the two projects are aimed at promoting good governance,
security, transparency, accountability, curbing drugs, organised crime and reforming the justice sector. The Minister stated that the Federal Government recognises the need for a better coordination of the entire justice sector, which involves the police, the courts and the prisons. Speaking, Dr. MacRae noted that the overall objective of the projects is to promote good governance and the rule of law, and contribute to Nigeria’s efforts in the reform of the justice sector and in addressing drug and related
crime in Nigeria. In both cases the expected results are intended to enhance the development of Nigeria for the benefit of its citizens. The justice sector project is targeted to benefit amongst others, the Federal Ministry of Justice, the Federal Judiciary, the National Judicial Institute, the Nigeria Police Force, the Nigerian Prisons Service and the National Planning Commission. Other important stakeholders that are expected to benefit from the project are the National Human Rights Commission, the Legal Aid Council of Nigeria, and selected State Ministries of Justice and Judiciary.
Dupont expands frontier, opens new office in Nigeria By NKIRUKA NNOROM s part of its continued growth strategy in key developing markets, DuPont has opened a new office in Nigeria to serve as its hub for the West African region. The company said it is currently working in partnership with local companies, industry leaders, academic institutions and government to produce innovative solutions in the country. “Over the past several years, we have invested in developing markets and leveraged our technology. Our full-year financial results were very strong. Sales of $38billion were up 20 per cent compared to 2010, with a 27 per cent increase in
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developing markets,” said Ian Hudson, DuPont President Europe, Middle East and Africa, at the opening of its Lagos office. He stated that with the new ultra-modern office in Lagos, the company has brought its services closer to the Nigerian people and has solidified its presence as stakeholders in the country’s economy. Alessandro Raemy, Country Manager DuPont Nigeria, stated that DuPont was eager to contribute towards uplifting the local economy by bringing the products and solutions to the market and helping to advance the agriculture, solar energy, oil & gas, c o m m u n i c a t i o n s , transportation, as well as safety & protection industries. Within
the medium term, the company projects to invest $150 million (N223.7 billion) into Africa. “Global companies can’t afford to neglect a fastgrowing market such as Nigeria. The country’s current population is estimated at 167 million and it will increase by more than half within the next 40 years. This makes it one of the fastest growing populations globally,” said Raemy. ”We must invest and partner today with key customers and stakeholders in Nigeria to support what we hope will continue to be the long term sustained growth of the local population and economy in the coming years”, he said.
Vanguard, MONDAY, JULY 2, 2012 — 21
Business & Economy
Policy inconsistency bane of manufacturing sector, says Obasanjo ...seeks ban of imported goods BY NKIRUKA NNOROM & NAOMI UZOR
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nconsistency and lack of coordination in policy formulation by the government is one of the major reasons behind sluggish growth and development in the manufacturing sector, former President, Chief Olusegun Obasanjo, has said. Delivering a paper, “Strategies for Accelerated Development of the Manufacturing Sector: The way Forward,” at the 40th Annual General Meeting of the Manufacturers Association of Nigeria (MAN) in Lagos, Obasanjo, stated that lack of cooperation among different stakeholders in the industry and unpatriotic attitude towards locally manufactured goods are part of the constraints to the growth of the sector, calling for ban of imported products into the country. He hinted that during his administration, he took various steps to ban the importation of foreign products, citing the ban on importation of Cement and fruit juices as example. He said, “There have been lack of vision and sustained mission in pursuing growth and development in the manufacturing sector. Since
independence, policies, programmes and ideas of government have been lopsided. They have not been consistent. There must be coordination at all levels. Things must be coordinated. It is not a situation where the manufacturers are going in one way and other stakeholders are heading in an opposite direction. Vision 20:2020 will be a hopeless and unfulfilled dream without all actors working together in ensuring acceleration of
growth in the manufacturing sector.”
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hen there is poor attitude both from the giving and receiving end, particularly from the private sector. They see the farmers as those who are coming to reap from where they did not sow. This leads to lack of support and sustained vision. Then there is this poor mentality and quick money making
syndrome among Nigerians. Manufacturing takes time; there is gestation period,” he added. He noted that governments at all level- States, local government, leadership at community level and even financial institutions- must corporate to effect changes in the system, saying that a situation where financial service providers deny budding industries credit facilities was endemic to the sector.
(L-R): Direct-To-Consumer (DTC) Manager, P&G West Africa, Mrs Doro Fatou; a winner of N100, 000 Always Scholarship and student of Government Secondary School, Gwarinpai, Abuja, Bilikisu Salawudeen with her guardian, during the Always Care Scholarship award presentation event held recently in Lagos.
FG wants states’ export promotion committee upgraded to agencies By NKIRUKA NNOROM
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he Federal Government (FG) has urged the various state governments to upgrade their existing Export Promotion Committees to Export Promotion Agencies in line with its determination to enable states to be more involved in non-oil export promotion activities. The upgrade will complement the role of the Nigerian Export Promotion Council towards improving value addition activities. This was contained in a 16Point Communiqué adopted th at the just concluded 5 Meeting of the National Council on Trade and Investment (NCTI-05) in Minna, Niger State. The National council is an annual meeting that affords
all stakeholders the opportunity to interact and formulate policies and programmes as they affect Trade, Investment and Industry in the country as well as review progress made so far on the policies formulated year-on-year. The Council also urged the Industrial Training Fund (ITF) to strengthen liaison with agencies involved in the establishment and administration of skills acquisition centres owing to the importance of skills acquisition in industrial development. It applauded the on-going campaign by the Federal Ministry of Trade and Investment to encourage Nigerians to patronize Made-in-Nigeria Products, advising that the matter should be referred to the
National Economic council for consideration and endorsement to fast-track the implementation of the programme. Council commended the efforts of the Federal Ministry of Trade and Investment (FMTI) in addressing some of the challenges of Trade and Investment through various Initiatives. It condemned the lack of effective synergy amongst the agencies and urged that related activities be harmonized for more positive results.
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t also took note of the efforts of the Federal Ministry of Trade and Investment in the African growth and Opportunity Act (AGOA) process, particularly with respect to the activities of African Women entrepreneurship Programme
(AWEP). It however observed the absence of coordination between the Ministry and some of her Parastatals involved in the process and urged for harmonization and streamlining of activities. The Council noted the deficiencies (contamination) such as Aflotoxins discovered recently in exported Mellon Seeds and encouraged States and other relevant agencies to collaborate with NEPC for capacity building on the value chain development for Melon; They also acknowledged the vital role of non-oil export in national development and recommended the review of qualifying capital of N5 million (Five Million Naira) for Export Expansion Grant (EEG) scheme to capture more small scale exporters among other issues.
BRIEFS SON gives marketers 2 weeks ultimatum to remove substandard products
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he Standards Organisation of Nigeria (SON) has warned traders in the FCT to remove all sub-standard products in the market within two weeks or face prosecution. Dr. Joseph Odumodu, its Director General, gave the warning at a Market Enlightenment/Sensitisation Seminar in Abuja. Odumodu, who was represented by Mr Paul Angya, the Director of Human Capital in SON, said marketers should always confirm if products had been tested with evidence of test certificates. He listed the country of origin, manufacturing and expiry dates, guaranty/warranty, and label, among others, as some of the things the importer and purchaser should check before transaction. Odumodu said that traders should imbibe the tenets of self regulation by removing all those products that did not conform to standard specifications within the next two weeks.
Ethiopia signs $3.2bn deals for new railway line
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thiopia has signed two deals worth $3.2 billion with Chinese and Turkish companies to construct a railway to link the landlocked Horn of Africa nation to Djibouti’s Tadjourah port to export potash, officials said. Ethiopia, which has seen high economic growth over the past five years, hopes to exploit growing business ties with China, India and Turkey to boost its expanding economy. Under a five-year development plan launched in 2010, the government aims to pursue power projects and boost infrastructure, including building several new railways. Getachew Betru, head of the Ethiopian Railways Corporation (ERC), said Turkish firm Yapi Merkezi will build a $1.7 billion railway line in the northeast, part of a project that stretches to Djibouti’s third port of Tadjourah, which is under construction. C M Y K
22 — Vanguard, MONDAY, JULY 2, 2012
Banking & Finance BRIEFS Bank rate rigging scandal widens; Diamond fights on
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scandal over the rigging of key interest rates could create a legal morass that may hamper the global banking industry for years, analysts said, as the head of Barclays fought to hold onto his job. With the Times newspaper naming RBS as the next bank facing a fine for its alleged involvement in manipulating the key lending rate between banks, the head of the Bank of England said there needed to be “ real change” in the industry’s culture. “That will require two things. One is leadership of an unusually high order and changes to the structure of the industry,” Mervyn King told a news conference, adding he hoped that the UK parliament would legislate as soon as possible. U.S. and British authorities fined Barclays $453 million on Wednesday for manipulating the London interbank offered rate (Libor), which underpins some $360 trillion of loans and financial contracts around the world - and analysts forecast more banks would soon be named for collusion.
IRS steps up scrutiny of tax-exempt political groups
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he U.S. Internal Revenue Service is signaling that it will increase its scrutiny of tax-exempt political organizations, which are becoming a force in elections by raising tens of millions of dollars from undisclosed donors. The IRS has been corresponding with such groups and is preparing questions to ask them as part of effort to determine whether their fundraising or advertising work runs afoul of tax law. IRS spokesman Terry Lemons said on Thursday the scrutiny will affect a range of tax-exempt groups. The move comes as such tax-exempt groups - many of which have better-known sister organizations known as “Super PACs,” or political action committees - are under criticism from Democrats and some Republicans for using money from anonymous sources to try to influence elections. C M Y K
FROM LEFT: Mr. Asue Ighodalo, Vice Chairman, SBL Council; His Excellency Senator Liyel Imoke, Special Guest, Governor,Cross River State; George Etomi, former Chairman, Section on Business Law and Mr. Gbenga Oyebode, Chairman NBA Section on Business Law during the Section on Business Law Chairman’s Dinner in Lagos.
Cashless: Banks get $510,000 US grant for data recovery I F n demonstration of its support for the Central Bank of Nigeria's (CBN) cash-less policy, United States Trade and Development Agency (USTDA) has provided a grant of $510,000 for the establishment of a Disaster Recovery Centre (DRC) to fortify and protect e-payment transactions in the country. Head Shared Services, Chidi Umeano, who made this known in Lagos, said the grant will be used to finance qualified US firm to provide expert consulting services in determining the technical requirements, business and operational models for the project. Already, a vendor has been evaluated and selected by the CBN, which has also received a ‘letter of no objection’ from USTDA. Besides, he said the legal unit of the CBN is already drafting contract agreement that will be reviewed and binding on both parties. Besides, he said the banking watchdog is also developing modalities or work plan for implementation of shared tier-three Disaster Recovery Centre infrastructure and services. The apex bank is also working on shared power infrastructure service to the banks, as well as developing the Nigeria Financial services network (NFSN) to effectively achieve these objectives. “The CBN is also setting up IT Standards Board and requisite governance framework to oversee the administration of IT standards
in the industry and drive its adoption across the players in the industry. We understand that payment is the key driver of cost distribution in the industry and accounts for almost sixty per cent of the industry cost base,” he said. Consequently, Umeano explained that the CBN is working with the banks to ensure more efficiency in the payment system, adding that cash management constitutes almost 80 per cent of bank infrastructure and staff, which directly drive up, the cost of banking service. He said that the CBN having monitored the partial implementation of the cashless policy and following stakeholder engagement on the effective implementation of
the project, decided to reassess its parameters to allow for smooth transition and adoption.
or instance, the apex bank has given exemptions to Ministries, Departments and Agencies (MDAs) of the federal and state governments on lodgments for revenue collections only. Umeano said the cash-less initiative has tremendous benefits for the people and the economy. It would reduce the cost of cash handling and cost of funds; with available statistics showing that the Central Bank and the banks would have spent over N200 billion on cash management by 2012.
This cost he explained, can be ploughed into infrastructure development. It would also mean that majority of Nigerians would stop subsidizing the cash handling cost of heavy cash users,” he said. He added that only 10 per cent of branch transactions in Nigeria are above N150, 000, but they make up about 77 per cent of the value of cash transactions in the country’s financial system. The initiative will also usher in an era of convenient and secure payment systems, he said. He explained that the policy was designed to promote financial intermediation, financial inclusion, minimise revenue leakages in the economy.
UBA reviews ATM charges for customers U
nited Bank for Africa, UBA has reviewed charges associated with ATM cards, significantly lowering the cost of transactions, particularly for its Verve Debit card customers. Instead of the monthly charge of N100 which is a flat fee charged to all ATM card holders, UBA has introduced a pay-as-yougo charge structure. In the month a customer does not withdraw cash at the ATM but use PoS and Internet to make payments the customer will not be charged the N100 flat fee. This is to encourage the uses of alternate channels. Divisional Head e-banking, UBA, Dr. Yinka Adedeji said the move was aimed at
delighting customers, following recent complaints and feedback as well as foster the Cashlite initiative of the Central Bank of Nigeria to the mass market.
H
e explained that ATM card holders who seldom use ATMs will now pay less. “If you do not use the ATM to do cash transaction you do not pay”. He was quick to point out that frequent ATM users are not disadvantaged as a result of the new pricing regime. “Assuming as a frequent user and you visited the ATM more than 10 times during the month, you will not be charged more than the
monthly cap of N100” he stated. He explained that Pay-asU-Go type of charges is only applicable with the bank’s local Verve Debit card though UBA has kept open the option of Visa and MasterCard single currency cards that still attract N100 per month fee with unlimited ATM access. “Customers are free to choose the N100/month or the Payas-you-go option” said Adedeji. United Bank for Africa (UBA) is a leading Pan African Bank with presence in 19 African countries, New York, London and Paris thus being able to effectively arbitrage Africa an African related business globally.
Vanguard, MONDAY, JULY 2, 2012 — 23
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24 — Vanguard, MONDAY, JULY 2, 2012
Corporate Finance
From, left: Dr. Adebayo Aboyemi –Cole, Dean, School of Management & Business Studies Lagos State Polytechinc; Mr. Joseph Jaiyeola, President /Chairman of Council, Chartered Institute of Bankers of Nigeria, CIBN and Dr. Uju Ogubunka Registrar CIBN at the signing of a Memorandum of Understanding with the Lagos State Polytechnic on ACIB/HND Linkage Programme, in Lagos. Photo By Diran Oshe
Banks’ ratings:Whatimpact on profitability, return for investors? BY MICHAEL EBOH T he recent ratings of Nigerian banks by both local and international rating agencies has raised the questions of how the ratings will affect and be translated to improved profitability of the affected banks and how effectively they will meet the expectation of shareholders and other stakeholders. Stakeholders are however, optimistic that the ratings will have a positive effect on return on investment, boost the banks’ top and bottom line and also impact positively on the banking sector, in general. Fitch, in a commentary titled, ‘Nigerian Banks: Key Rating Drivers for the Sector,’ said that Nigerian banks’ long-term ratings are constrained by an extremely challenging operating environment, concentrated credit risk and weak albeit improving corporate governance and transparency requirements. According to Fitch, the drivers for the ratings of the various Nigerian banks are either based on the banks’ individual credit strength or the perceived probability of support from the state or institutional parent. It said, “Inefficient operations remain a characteristic of the market that Nigerian banks will need to address in order to ensure their long-termsustainability.” Earlier in the year, in an apparent affirmation of the financial strength and the solidity of the Nigerian C M Y K
financial services sector, Standard & Poor ’s, S&P, Rating Servicesrevised the outlook on three Nigerian banks — First Bank of Nigeria Plc, Zenith Bank Plc and Guaranty Trust Bank Plc — to positive, from stable. In its rating of the banks, S&P said the positive outlook largely reflected the banks’ stand-alone credit profiles and the outlook on the sovereign.
,
diversification and a larger branch network and deposit franchise. It added, however, “Our opinion of FCMB’s business position would improve if the bank continued to increase its market share and improve its competitiveness, thereby creating a sustainable track record of revenue stability. We expect better risk management and a stable economic climate to lead to signs of
As the second quarter results of the banks are been expected, shareholders and other stakeholders await the impact the ratings will have on the banks’ performance in the 2012 financial year and beyond
It added that the raising of the Nigeria national scale long-term ratings was based on its expectations that improvement in the economic environment would have a positive effect on the banks’ financial performance, translating into lower cost of risk and continued focus on bad debt recovery. Also, S&P, last week, upgraded First City Monument Bank, FCMB, rating to stable, while F, S&P and Agusto all upgraded their rating on Access Bank Plc. In rating FCMB, S&P said it reflects its expectation that that the next two years will see stable economic growth, with minor currency fluctuations. It also expressed optimism that the merger with Finbank Plc is expected to improve FCMB’s business position through local market
,
improvement in the risk position during the next two years.” In an analysis of Access Bank’s rating, the agencies revealed major upgrades which are attributable to the bank’s improved market position, strong capitalization and strong liquidity profile; enhanced distribution network and expanded client base. According to opinions expressed on Access Bank by one of the rating agencies, “Access Bank’s funding has been strengthened by an enlarged branch network following consolidation, which has availed the Bank a vast pool of low-cost deposit”. It stated further that, “In the year under review, local currency deposits grew by 114 per cent to N871 billion. Deposits adequately funded
the loan book and Access Bank’s liquidity ratio stood at 74 per cent as at December 31, 2011, well above the regulatory minimum of 30 per cent”. Similar to S&P’s opinion, analysts say Access Bank’s improved rating is attributable to its strong liquidity and funding position, which is a clear affirmation of its position as one of Nigeria’s tier one Banks and corroborated by its enhanced capacity to execute larger transactions as well as access long-term funding from foreign multilateral agencies and institutions. According to the analysts, the current ratings assigned Access Bank is not materially different from other Tier 1 Banks – First Bank, Zenith, GT Bank, Access Bank and UBA. Analysts are optimistic that the rating will create expectation about the future of the bank and its rearticulated corporate vision and mission which has resulted in novel approach to banking operations. While all the banks rated, with the exception of FCMB, recorded impressive financial performance in their 2011 results, the banks assured of a significant improvement in their 2012 financial performance and beyond. For instance, First Bank gross earnings grew by 42.5 per cent to N92.3 billion in its first quarter ended, March 31, 2012, financial statement, from N64.8 billion recorded in the same period in 2011; operating income rose by 50.2 per cent to N74.2 billion from N49.4 billion in first quarter 2011, while its profit before tax grew by 101.6 pecent to N28.9 billion from N14.3 billion in 2011. GTBank in its first quarter 2012 financial performance, recorded profit after tax of N19.312 billion, rising by 35 per cent from N14.328 billion recorded in similar period in 2011; Zenith Bank declared a profit after tax of N19.2 billion for the quarter, representing an increase of 26 per cent from N15.3 billion recorded in the same period in 2011.The rating agencies are of the view that capital is becoming increasingly tight in the sector, with little appetite for fresh equity issuances. According to Fitch, this means that current levels of capital are unlikely to be sufficient to support any material asset growth in the industry. As the second quarter results of the banks are been expected, shareholders and other stakeholders await the impact the ratings will have on the banks’ performance in the 2012 financial year and beyond.
BRIEF Nestle in talks for 7bn euro acquisition loan
N
estle , the world’s biggest food group, has been talking to banks about raising a new 7 billion euro ($8.7 billion) syndicated loan to help fund its $11.85 billion takeover of Pfizer Nutrition, banking sources said . Nestle said in late April the acquisition would be fully debt-financed through internal cash resources, existing facilities and the bond markets. The new loan would give the company enough liquidity until the deal is approved, which is expected to be in the first quarter of 2013, if the acquisition goes ahead, bankers said. Nestle was not immediately available for comment. The new loan is expected to have a short-term maturity of one year, with a one-year extension option, which could lead to a quick bond market refinancing, they added. The loan could be raised as an undrawn revolving credit which would support the company’s short-term money market Commercial Paper program - a borrowing route that Nestle has taken before. Bankers are confident that the company will be able to raise the money after holding extensive discussions for the last couple of months, but are less confident about making money on the deal. “Nestle has been talking to banks for the last two or three months and could round this up in 24 hours if needed. There is not a single concern that it could raise the money, it’s just timing and whether they want to do the M&A deal,” a senior banker said. Nestle is one of the most aggressive borrowers in the loan market and has historically been able to raise funds at the cheapest rates. Nestle last tapped the loan market in October 2011 for a 4.5 billion euro revolving credit facility which paid an initial margin of just 10 basis points (bps), the lowest margin for a European loan in 2011. Undrawn commitments on that deal paid just 1 bp. While the size of the new loan and the fact that it is additional borrowing or ‘new money’ for Nestle mean that the company is likely to be unable to replicate those lows, it will still be an unprofitable piece of business on a standalone basis.
Vanguard, MONDAY, JULY 2, 2012 — 25
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26 —Vanguard, MONDAY, JULY 2, 2012
Corporate Finance BRIEFS Capital Market Academy to hold training
C
apital Markets Academy, the London’s global financial markets and professionals’ development training academy has concluded plan to hold executive development programme. According to its local partners, Proshare, Nigeria, a financial information communication, investors relations and Analyst firm,”This full suite development programme has been in the works for a while now, undergoing preparations for an appropriate time to expose to the Nigerian capital market stakeholders. It brings on board global best practice available backed with real life realities of the Nigerian environment to develop a set of programmes that help us transit into the post crisis operating environment” The objective of this engagement is strategic, as it aims, through the Training Programme, to: Facilitate greater understanding of the key products within the Nigerian Capital Markets today.; Equip staff with practical learning that they can apply immediately in their roles and disciplines; Enable attendees to benefit from a highly interactive learning approach.
GSK further extends $2.6bn Human Genome offer
G
laxoSmithKline has again extended its $2.6 billion offer to buy longtime partner Human Genome Sciences in a hostile standoff with the U.S. biotech. The offer - now extended until July 20 - remains pitched at $13 per share. The decision by Britain’s biggest drug maker to push back the closing date comes as no surprise, since Human Genome effectively extended the battle two weeks ago by setting a July 16 deadline for definitive takeover offers. In the wake of the GSK extension, Human Genome repeated its rejection of the offer as not reflecting the inherent value of the company. Buying Human Genome would give GSK the full rights to drugs on which the two companies collaborate.
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Equities’ value rises by N55bn, trading up by 478% BY MICHAEL EBOH, CHINEDU IBEABUCHI & WILLIAMS JIMOH
A
significant improvement was recorded in transactions on the Nigerian Stock Exchange, NSE, last week, as the value of listed equities and value of shares traded both appreciated by N65.377 billion and 477.98 per cent respectively. In particular, equities’ value, represented by the market capitalization and Allshare index, rose by 0.96 per cent. The capitalization closed the week at N6.895 trillion, up from N6.829 trillion at which it opened the week. The index rose by 204.8 basis points to close the week at 21,599.57 points from 21,394.77 points. Equity trading, driven by transactions in the shares of Union Bank Nigeria Plc, appreciated by 477.98 per cent as investors’ exchanged 5.381 billion shares valued at N22.467 billion was recorded in 17,019 deals, compared to the previous week’s turnover of 930.677 million shares valued at N6.327 billion in 17,744 deals. The Financial Services
recorded the highest transaction in the week under review, accounting for 91.04 per cent of the market turnover, with 4.899 billion shares valued at N18.920 billion in 9,520 deals. The Banking sub-sector recorded the highest patronage in the Financial
Services sector, accounting for 97.51 per cent of the sector’s turnover and 88.78 per cent of the total market turnover, with 4.777 billion shares valued at N18.812 billion in 8,778 deals.
U
nion Bank Nigeria Plc emerged the most active in the subsector, trading 4.329 billion
shares valued at N15.847 billion in 234 deals; Diamond Bank Plc followed with a turnover of 69.83 million shares valued at N150.247 million in 220 deals and United Bank for Africa Plc recorded 49.499 million shares valued at N181.961 million in 715 deals. The Conglomerates sub-
From left: Dr.,Muhammad Ali Pate, Hon minister of state for health; Mrs, Fola Laoye, Chairman Hygeia group, and Mr, Afolabi Ogunlesi, managing partner, Vesta Healthcare, at the Inaugural Nigeria Private Health Summit, titled, “unlocking the market potential of Nigeria’s private health sector in Lagos . Photo by Folake Odebiyi
RT Briscoe shareholders approve 10 kobo dividend, scrip issue BY PETER EGWUATU
S
hareholders of R.T Briscoe Nigeria Plc unanimously endorsed the 10 kobo dividend and a scrip issue of one for five shares recommended by its Board of Directors for the financial year ended December 31, 2011. The shareholders at the company’s Annual General Meeting (AGM) held last weekend, in Lagos commended the Board for the impressive performance despite the harsh environment it operated upon during the year under review. The shareholders further lamented on the deplorable condition of infrastructure in the country and called on the company’s chairman to use its influence to notify the government on the need to tackle these inadequacies. Speaking at the AGM, Alhaji Gbadebo Olatokunbo, said,
“We commend your performance, the dividend and bonus shares proposed for shareholders. We still require you to outperform better than this. I advise that a tax consultant be engage for the company so that we can pay appropriate tax to the government as a good corporate citizen. To pay tax is a task that must be done. There seems to be some misrepresentation in the figure contained in the annual report. I will also suggest that we look at our generators that we sell; whether it can easily be converted to gas because it is cheaper to use gas than petrol.” Mr. Michael Cole, a member of Independent Shareholders Association of Nigeria (ISAN), said, “We commend the performance of the company and congratulate it for clocking 55 years. We also commend management for increasing its workforce, thus helping in
reducing unemployment. We will support the company when it decides to float public offering and advised that strict measures be taking to recover debts owed the company. We thank the company for publishing the list of unclaimed dividend but advised that their beneficiaries be included in subsequent period.”
M
r. Udoh Edem, another shareholder, said, “Our company has done well considering the challenges it faced during the year under review. I advise the company to consider the issue of International Financial Reporting Standard and make frantic effort towards its adoption. It is better to comply and avoid paying fine to the regulators. Meanwhile, the Chairman, R.T Briscoe, Mr. Clement Olowokande, commended the shareholders for their support
and useful contribution to the growth of the company. He said, “Various measures had been taken that will begin to bear fruits in the nearest future. The turnover and profit after tax of the company increased by 30 per cent and 42 per cent respectively in 2011 from N15.1billion and N40.3million in 2010 to N19.6 billion and N215 million in 2011.” He further explained that 95 per cent of the debts owed the company had been recovered as its provisions for doubtful debt declined. According to him, “In furtherance of the company’s strategic objectives of improving contribution of our non motor business, it increased its shareholdings in Briscoe Property Limited, of which the benefits will begin to manifest in the years ahead. We hope to see improved performance in our next accounting year.”
0.95
0.88 5.52 1.12 6.43 32.76
29.08 8.69
Livestock/Animal Specialities Livestock Feeds Plc
CONGLOMERATES Diversified Industries A.G. Levents Nigeria Plc SCOA Nigeria Plc Transnational Corporation Chellarams Plc UACN Plc
CONSTRUCTION/REAL ESTATE Non-Building/Heavy Construction Julius Berger Nig Plc Roads Nigeria Plc
38.31
5.10 3.90 59.00 2.00 4.60 0.50
14.18 425.00
11.10 36.19 3.30 2.88
27.00 29.70
6.10 0.64 0.57 2.15 10.50 1.21 0.50 10.93 3.10 14.95 1.07 0.70 1.15 2.80 0.88 6.35 1.09 3.75 3.80 0.50 0.50 13.90
0.50 0.71 0.50 0.50 0.50 1.57 0.50 0.56 0.50 1.47 0.50 0.74 0.50 0.50 0.50 0.57 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
0.50 0.50
0.50 2.02 0.50
Beverages-Non-Alcoholic 7-UP Bottling Company Plc
Food Products Dangote Flour Mills Plc Dangote Sugar Refinery Plc Flour Mills Nigeria Plc Honeywell Flour Mill Plc National Salt Co. Nig Plc UTC Nigeria Plc
Food Products-- Diversified Cadbury Nigeria Plc Nestle Nigeria Plc
Household Durables Beta Glass Co Plc Nigerian Enamelware Plc Vitafoam Nig. Plc Vono Products Plc
Personal/Household Products PZ Cussons Nigeria Plc Unilever Nigeria Plc
FINANCIAL SERVICES Banking Access Bank Plc Afribank Nigeria Plc Bank PHB Plc Diamond Bank Nigeria Plc Ecobank TRANSNATIONAL INCORPORATION Fidelity Bank Plc FinBank Plc First Bank of Nig. Plc First City Monument Bank Plc Guaranty Trust Bank Plc NPF Micro-Finance Bank Plc Intercontinental Bank Plc Oceanic Bank International Plc Skye Bank Plc Spring Bank Plc Stanbic IBTC Bank Plc Sterling Bank Plc UBA Plc Union Bank Nig. Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc
Insurance Carriers, Brokers and Sector AIICO Insurance Plc Continental Reinsurance Plc African Alliance Insurance Cornerstone Insurance Company Consolidated Hallmark Insurance Custodian and Allied Insurance Plc Equity Assurance Plc Goldlink Insurance Plc Great (Nig) Insurance Plc Guaranty Trust Assurance Plc Guinea Insurance Plc Intercontinental Wapic Insurance Plc International Energy Insurance Plc Investment and Allied Assurance LASACO Assurance Plc Law Union & Rock Insurance Plc Linkage Assurance Plc Mutual Benefits Assurance Plc NEM Insurance Co. (Nig) Ltd Niger Insurance Co. Plc OASIS Insurance Plc. Prestige Assurance Co. Plc Regency Alliance Insurance Sovereign Trust Insurance Staco Insurance Plc Standard Alliance Insurance UNIC Insurance Plc Universal Insurance Plc
Mortgage Carrier, Broker and Sector Aso Savings and Loans Plc Resort Savings & Loans Plc
Other Financial Institutions Crusader (Nigeria) Plc Deap Capital Management & Trust Plc Royal Exchange Assurance
7.77
3.29 220.00 6.00 101.00 0.89
HEALTHCARE Medical Supplies Morison Industries Plc Healthcare Providers
0.50
Beverages-Brewers/Distillers Champion Breweries Plc Guinness Nigeria Plc International Breweries Plc Nigerian Brew Plc Premier Breweries Plc
100.00
Real Estate Investment Trusts Skye Shelter Funds CONSUMER GOODS Automobile/Auto Parts DN Tyres & Rubber Plc
9.57
0.50 29.50 15.50
1st fTier Securities AGRICULTURE Crop Production FTN Cocoa Processors Plc Okomu Oil Palm Plc Presco Plc
Real Estate Development UACN Property Development
0.50
Oil and Gas and Products Petroleum Products Capital Oil Plc
Company
Opening Price (N)
Capital Market
7.39
0.50 2.02 0.50
0.50 0.50
0.50 0.79 0.50 0.50 0.50 1.50 0.50 0.54 0.50 1.31 0.50 0.84 0.50 0.50 0.50 0.55 0.50 0.50 0.50 0.51 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
6.49 0.64 0.55 2.15 10.80 1.14 0.50 10.92 3.23 15.00 1.07 0.70 1.15 2.88 0.88 6.40 1.20 3.66 3.73 0.50 0.50 13.75
25.50 30.01
11.10 36.19 3.29 2.88
14.98 446.25
5.45 4.18 57.00 2.01 4.48 0.50
38.31
3.29 228.00 5.98 101.23 0.89
0.50
100.00
8.82
27.63 8.69
0.82 5.52 1.08 6.43 31.90
0.99
0.50 29.50 14.73
0.50
Closing Price (N)
110,000
1,000 84,748 153,140
7,478 200,000
3,267,222 772,000 1,000 160,000 100 1,094,800 650,475 638,525 2,000,000 1,152,721 900,000 773,342 112,666 1,670,890 353,038 282,804 350,200 202,400 1,527,255 1,530,000 1,000 317,521 100 3,487,521 550,600 402,304 5,000 326,.570
7,235,214 646,608 146,538,502 3,055,448 9,278,110 14,017,904 1,000 10,283,889 2,660,180 22,716,075 56,000 73,200 91,000 780,396 1,006,032 593,342 6,198,961 25,520,849 1,421,678 499,298 598,199 10,657,457
209,242 493,508
418 60 149,740 1,000
307,269 74,112
273,362 4,202,531 147,672 470,400 601,315 20,500
12,478
100 260,743 1,211,295 466,530 50,000
1,450,600
100,000
50,675
5,500 100
155,000 355 23,289,956 18,198 298,180
583,700
2,500 30,000 139,798
50,000
Quantity Traded
10.54
0.61 2.02 0.66
0.50 0.50
1.06 1.20 0.50 0.50 0.50 3.51 0.50 0.69 0.50 0.95 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.90 0.50 2.50 0.50 0.50 0.50 0.50 0.50 0.50
11.10 3.39 2.30 9.27 4.30 3.20 9.50 16.12 8.30 20.50 1.78 1.78 13.50 10.17 2.18 11.38 2.91 11.70 5.38 1.92 1.75 16.70
43.50 31.25
15.58 42.66 6.75 3.67
29.20 470.00
19.90 16.20 95.00 6.60 6.70 0.88
9.52
0.50 2.02 0.50
0.50 0.50
0.50 0.85 0.50 0.50 0.50 2.00 0.50 0.50 0.50 0.95 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 1.90 0.50 0.50 0.50 0.50 0.50 0.50
4.26 0.64 0.53 2.05 1.65 1.20 0.00 7.95 3.60 11.64 0.00 0.87 0.00 3.90 0.73 6.30 0.95 2.17 1.96 0.50 0.52 11.45
27.00 22.56
12.71 36.19 4.78 2.66
10.17 367.83
4.31 4.02 57.00 2.31 3.80 0.50
39.00
186.00 5.23 72.50 0.93
255.00 7.10 100.00 1.01 51.49
2.23
0.50
97.00
11.59
32.96 3.01
1.45 5.52 0.50 6.43 28.70
0.48
0.50 14.53 6.40
Year Low
4.63
0.50
100.00
20.15
62.26 8.28
2.54 8.28 1.82 7.60 42.50
0.66
0.64 24.58 8.30
Year High
0.00
0.00 0.00 0.03
0.00 0.00
0.09 0.10 0.00 0.00 0.06 0.43 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.02 0.06 0.10 0.00 0.10 0.36 0.01 0.01 0.14 0.03 0.07 0.00 0.00 0.00 0.00
0.80 0.00 0.00 0.00 0.28 0.22 0.00 1.34 0.69 1.61 0.00 0.18 0.00 0.85 0.50 0.54 0.22 0.13 7.59 0.11 1.34 1.57
1.29 1.32
3.90 1.61 0.70 0.00
0.28 15.94
0.54 0.71 4.50 0.26 0.73 0.06
3.70
12.12 0.35 4.50 0.00
0.00
0.00
11.75
1.66
3.26 3.66
0.28 0.35 0.22 0.31 7.03
0.04
0.01 7.94 1.80
E.P.S.
0.00
0.00 0.00 16.67
0.00 0.00
5.56 10.20 0.00 0.00 8.33 4.88 0.00 0.00 0.00 17.25 0.00 0.00 0.00 25.00 8.33 5.00 0.00 5.00 1.39 50.00 50.00 6.43 16.67 7.14 0.00 0.00 0.00 0.00
5.83 0.00 0.00 0.00 25.91 6.68 0.00 6.96 6.20 8.74 0.00 5.44 0.00 5.07 5.44 14.81 4.68 19.23 0.28 4.82 0.43 7.83
20.93 20.46
3.26 22.48 7.34 0.00
37.57 27.96
16.91 14.38 16.89 16.92 5.75 8.83
13.92
19.98 16.29 22.22 0.00
0.00
0.00
8.51
7.33
10.11 2.26
5.18 15.77 3.64 20.74 4.14
15.00
50.00 2.77 4.37
P.E. Ratio
0.50
Non-Metalic Mineral Mining Multiverse Plc
1.52 6.00
Transport-Related Services Airline Services and Logistics Plc Nigerian Aviation Handling Company
0.50
Road Transportation Associated Bus Company Plc
4.90
1.64 2.40 4.20 4.37
Speciality Interlinked Technologies Plc
0.50 Printing & Publishing. Academy Press Plc Learn Africa Plc Longman Nigeria Plc University Press
6.78 1.15
0.50
3.18
1.97 1.68
Media/Entertainment Daar Communications Plc
Hotels/Lodging Capital Hotel Ikeja Hotel Plc
Courier/Freight/Delivery Red Star Express Plc Employment Solutions C & I LEASING PLC
Automobile/Auto Part Retailers Incar Nig. Plc RT Briscoe Plc
Afromedia Plc
0.50
00.50
Hospitality Tantalisers Plc SERVICES
14.50 20.50 0.50 19.61 3.17 11.00 132.90 33.98 120.00
0.60
OIL AND GAS Energy Equipment and Services Japaul Oil & Maritime Service
Petroleum and Petroleum Products African Petroleum Plc Beco Petroleum Plc Conoil Eterna Oil and Gas Plc Forte Oil Nig Plc Mobil Oil Nigeria Plc MRS Oil Nigeria Plc Total Nigeria Plc
3.98 12.71 13.28 4.30 1.05 2.92 0.63
Intergrated Oil and Gas Services Oando Plc
1.44 0.50
INDUSTRIAL GOODS Packaging/Containers Abplast Products Plc Beta Glass Co. Plc Greif Nigeria Plc Nampak Nigeria Plc Poly Products (Nig) Plc Studio Press (Nig) Plc W.A. Glass Ind. Plc
1.20 0.50
Electronic and Electrical Products Cutix Plc Nigerian Wire & Cable Plc Mortgage Carriers, Brokers and Se Abbey Building Society Plc Union Homes Savings and Loans
0.50
Processing Sysetms Chams Nigeria Plc
1.38
Metals Aluminium Extrusion Ind Plc
Paper/Forest Products Thomas Wyatt Nig. Plc
6.00 10.60
NATURAL RESOURCES Chemicals BOC Gases Plc
8.26
3.61 1.90
9.01 8.98 24.00 5.94 108.00 0.50 0.57 41.00 2.76 1.51 10.93
Tools and Machinery Nigerian Ropes Plc
Packaging/Containers Avon Crowncaps & Container Nigerian Bags Manufacturing Company
INDUSTRIAL GOODS Building Materials Ashaka Cement Plc Berger Paints Plc CAP Plc Cement Co. of Northern Nig. Plc Dangote Cement Plc First Aluminium Nigeria Plc DN Meyer Plc Lafarge WAPCO Plc Portland Paints & Products Nig Plc Paints & Coatings Manufacturers Premier Paints Plc
0.50
0.50
Computers and Peripherals Omatek Ventures Plc
ICT Telecommunications Starcomms Plc
0.50
ICT Computer Based Systems108 Courteville Investment Plc
13.12 2.66
5.05 0.57 0.90 22.50 1.72 0.80 8.59 3.33
Pharmaceuticals Ekocorp Plc Evans Medical Plc Fidson Healthcare Plc Glaxo Smithkline Consumer Nig May & Baker Nigeria Plc Neimeth International Pharm Nigeria-German Chemicals Plc Pharma-Deko Plc
IT Services NCR (Nig) Plc Tripple Gee and Company Plc
0.50
Opening Price N Union Diagnostics & Clinicals Services
1.53 6.00
4.90
0.50
1.64 2.30 4.20 4.19
0.50
6.94 1.17
0.50
2.99
1.97 2.11
0.50
0.50
20.50 0.50 19.61 3.00 10.99 132.90 33.98 125.00
13.44
0.69
3.98 12.71 13.28 4.30 1.05 2.78 0.6
1.44 0.50
1.33 0.50
0.50
1.38
0.50
10.60
6.00
8.26
3.10 1.93
9.30 8.54 24.00 5.90 110.00 0.50 0.52 41.00 2.38 1.91 10.93
0.50
13.12 2.66
0.50
0.50
5.05 0.67 0.94 23.25 1.87 0.76 8.59 3.17
0.50
Closing Price N
190,499 26,251
20
1,000
1,000 27,010 4,322 484,895
4,000
4,436,500 346,780
282,700
722,561
240 19,978,905
500
50,000
82,191 2,100 4,347 81,516 118,871 122,463 2 10,363
3,322,969
3,067,637
6,888 1,000 100 29,198 200 84,311
2,000 1,000
10,000 4,000
300
100
822,500
100
100
80
428,200 469,601
509,848 26,436 41,757 176,922 50,498 100,000 85,095 60,329 815,101 2,375,000 875
100,000
2,398 750
1,000
10,700
168 160,195 318,050 27,184 254,900 80,108 12,029 600
480,000
Quantity Traded
2.78 11.75
5.15
0.80
8.00 6.82
3.68
0.50
400 2.07
1.64
3.67
4.33 3.65
0.72
600
1.57 6.50
4.90
0.50
4.60 3.60
3.17
0.48
3.00 1.33
0.90
2.65
1.97 1.30
0.51
141.00 63.86 195.50
163.50 2,100 240.00
27.99 0.50 0.50 5.71 3.89
1.87
3.98 12.71 13.97 3.60 1.05 2.92 0.63
1.33 0.50
1.62 2.58
0.50
1.38
0.50
10.70
6.80
8.26
5.94 1.47
12.00 8.10 15.16 4.16 95.00 0.50 1.02 36.58 5.11 0.51 10.93
0.50
3.25 3.25
0.50
0.50
5.31 0.70 0.83 2.58 3.61 0.95 0.95 4.28
0.50
Year Low
0.87
0.51 0.80
0.00
0.00
0.00 0.13
0.26
0.00
0.22 0.69
0.08
0.54
0.00 0.16
0.04
13.32 3.32 11.91
4.93 0.00 6.02 0.67
6.95
0.16
0.00 3.90 0.00 1.22 0.17 0.07 0.00
0.05 0.00
0.13 0.00
0.00
0.00
0.00
0.13
0.93
0.00
0.15 0.19
1.59 1.71 1.76 1.80 8.01 0.00 0.00 1.05 0.36 0.18 0.00
0.00
6.49 0.00
0.04
0.05
0.06 0.00 0.27 8.88 0.21 0.08 0.00 0.00
0.00
E.P.S
4.22 8.75
0.00
0.00
0.00 27.69
12.19
0.00
34.09 2.12
11.25
4.91
0.00 8.19
12.75
11.11 19.23 17.07
6.99
7.40 0.00
4.17
6.06
0.00 3.26 0.00 3.52 6.18 41.71 0.00
28.80 0.00
13.15 0.00
0.00
0.00
0.00
85.77
7.37
0.00
39.60 9.16
7.86 4.97 8.88 2.31 13.17 0.00 0.00 42.86 14.19 2.89 0.00
0.00
1.43 0.00
12.50
10.00
9.05 14.13 0.00 0.00
88.50 0.00 3.07
0.00
P.E Ratio
as at Friday, June 29, 2012
37.10 0.70 32.60 5.59
78.97
0.97
3.98 15.58 15.03 4.30 1.86 2.92 0.63
1.51 0.99
2.50 2.58
0.50
1.38
0.50
12.39
9.20
8.69
6.91 3.60
30.00 12.57 43.98 15.49 132.51 0.75 3.51 48.05 5.28 3.36 13.40
1.47
9.31 3.59
0.50
0.52
5.31 1.45 3.20 23.11 5.61 1.96 12.91 200
0.50
Year High
Stock Market Report
Vanguard, MONDAY, JULY 2, 2012 — 27
28 — Vanguard, MONDAY, JULY 2, 2012
Homes & Housing Finance BRIEF Geographical mapping key for disaster management - Sambo
T
he federal government is committed to mapping the nation’s geographical landscape in a bid to effectively address disaster management in the country. Vice President Muhammad Namadi Sambo who stated this during the th Annual General Meeting of the Institution of Surveyors recently held Ilorin, Kwara State capital, said that the of the Surveyor-General of the Federation has been to accomplishthe task. Represented by Prof. Peter Nwilo,General of the Federation,the vice president called on state governments to also follow suit. “government of Nigeria will do everything possible to ensure that our geographical space is properly and comprehensively mapped,”he said. According to him, the themeof the meeting, “Climate Change and Disaster Management”, apt and timelyasit strikes the core of the challenge facing the world today.expressed the hope that the idea from the meeting would help to tackle global warming and environmental disasters it relates to the country. In his remarks, President of the Institute, Yakubu Maikano, said Nigeria needs a National Mapping Policy that would sustain the production of maps in the country.”The must produce accurate maps throughout the length and breadth of the country. When government came up with the l, surveyors advised government to embark on the mapping of the entire country for the successful delivery of the land reform dividend, especially to Nigerians in the rural areas”, he said. C M Y K
•A mansion in Asokoro
FG tasked on implementation strategy for housing delivery Stories by YINKA KOLAWOLE
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he federal government has been called upon to initiate implementation strategy that will lead to the
actualisation of its policy to build one million houses yearly. Two experts in the housing sector who spoke to the News Agency of Nigeria (NAN) in Lagoslauded the policy, but noted that government needto
fashion outan implementation strategy for the policy to work. Mr. Bunmi Ajayi, a Town Planner and a former President of the Association of Professional Bodies of Nigeria, said the idea was good, considering the huge
housing deficit in the country. He however called on or officials spell outthe implementation strategy ensure itsworkability. According to him, implementation strategy should be carefully worked out with the efforts of all stakeholders. On his part, Mr. Kayode Omotoso, Executive Secretary of Mortgage Banking Association (MBAN), said that the one million houses yearly would clear the housing deficit in six years. He however noted thatthe implementation strategy was necessary because the government would encounter challenges, including finance, land and professionals, in its implementation. Omotoso said orderto overcome the challenges, government requirethe efforts of the federal and state , the Organised Private Sector (OPS), commercial and mortgage banks.”Meeting the feasibility for the realisation of the one million houses yearly is the work of everybody.pronouncement means that the work of the ministerial team on affordable housing will escalate,”he added. According to him, as a member of the ministerial team, participate actively in all deliberations to ensure that the proposed of were realised.
Abbey renames, records 39.47% dip in profit A
bbey Mortgage Bank Plc, formerly Abbey Building society, recorded a drop in profit before tax for its operations in the 2011 financial year from N1.69 billion recorded in 2010 to N1.58 billion in 2011, representing a reduction of 39.47 percent. Gross earnings also dropped by 6.51 per cent from N1.69 billion in 2010 to N1.58 billion in 2011. Chairman of the mortgage bank, Chief Ifeanyichukwu Ochonogor, who gave the financial scorecard at the 20th annual general meeting of the bank, attributed the low performance to the vagaries in the property market throughout 2011. “Whereas the upper end properties continued a downward slide in both sales and rentals, low and medium income properties were quite active,” he stated. Ochonogor however revealed that total asset of the bank grew by 7.34 per cent
from N11.44 billion within the same period to N12.28 billion while deposit liabilities increased by 7.51 per cent from N3.46 billion to N3.72 billion, also within the period. Meanwhile, shareholders of the mortgage bank have endorsed operational changes of the bank to conform with the reform agenda of Central Bank of Nigeria (CBN) for mortgage banks and in line with international best practices. Among such changes is the renaming of the bank from Abbey Building Society Plc to Abbey Mortgage Bank Plc and approval of a National PMB status for the bank in accordance with new CBN guidelines, released in March 2012 with retrospective effect from November 2011. In her remarks, Managing Director of the bank, Mrs. Rose Okwechime, said in order to firm up its operations, the bank has engaged a risk
management consultant to do an organisation wide review, development of risk policies, parameters, monitoring/ execution plan and subsequently set up a risk management department for the bank. In addition, she said new mortgage software - Finnone lending - was acquired from India to address the bank’s growing loan portfolio and reporting requirements of both CBN and international investors. Okwechime disclosed that Abbey signed a $15 million joint financing agreement of the Agbara Phase III project with FMO for the development of 220 middle income housing units for the first phase of the project, adding that the project is expected to commence in the 2012 financial year. She further noted that Abbey is also supporting the development of Citigate project through a joint
financing with FMO to the tune of $17.5 million aimed at delivering 1,000 housing units in Ibadan. “We drew down on the second tranche of the $10 million FMO convertible loan in March, 2011 thereby resulting in a long term loan portfolio of N2.43 billion as at the end of the 2011 financial year,” she said. According to her management’s priority in 2011 was to reposition the bank for the challenges of the next five years, for which considerable time was dedicated to restructuring their portfolios of assets, adding that they also committed funds for the relocation of their head office to Victoria Island in Lagos. She also noted that the bank has a good working relationship with two foreign investors - Shelter Afrique and Afric-Invest.
Vanguard, MONDAY, JULY 2, 2012 — 29
Homes & Housing Finance
Rivers partners army on housing project Stories by YINKA KOLAWOLE
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iver State government is collaborating with the Nigerian Army to construct 50 blocks of housing units at the Second Brigade Headquarters in Port Harcourt. The five blocks of 10 flats, comprising one bedroom flat each, are being handled by an indigenous contractor and expected to be completed before the end of this year. At the foundation laying ceremony of the project, Governor Chibuike Amaechi said the construction of the housing units is aimed at boosting the peaceful atmosphere in the state, noting that soldiers discharge their duties better when they are comfortable. “When the soldiers are comfortable they will do greater works, so we believe this project would improve the security situation in the state. This is to ensure peaceful flow in our state and it is only in a peaceful atmosphere that development can thrive,” he said. The governor, who was represented at the event by Secretary to the State Government (SSG), Mr. George Feyii, however appealed to the officers to make good use of the property when completed and urged the contractor handling the
project to execute it judiciously. He assured the Nigerian Army and other security agencies of government’s readiness to assist them in the discharge of their duties for the benefit and protection of the people of the state. In his remarks, General Officer Commanding (GOC),
82 Division, Nigerian Army, Major General Olayinka Akinyemi Oshinowo, said on completion, project would alleviate the problem of accommodation being experienced by soldiers and their families in the garden city. He urged other state governments in the country to emulate the Rivers State
government. The Commander, 2nd Brigade, Headquarters, Port Harcourt, Brigadier-General Tanko Buratai, had earlier noted that apart from the housing units, the state government was also building three model primary schools within the barracks.
aniel Ford & Co Limited, managed by a Nigerian, Mr. Yemi Edun has clinched the ‘Best Property Management Agency’ at Lettings Agency of the Year Awards 2012 organised in association with The Sunday Times and The Times of London, and sponsored by Zoopla.co.uk The London-based firm won in the Silver-Best Property Management Agency category. The firm specialises in overseas landlords, giving it an edge in the highly-competitive lettings market, said Edun, the Chief Executive Officer of the firm. Judges praised “the agency’s highly compliant systems and processes, which are managed by a
From left: Sir Mathew Pinsent, a former Olympic champion; Stacey Hounslow; Yemi Edun, MD, Daniel Ford; and a representative of Zoopla
dedicated compliance professional,” a role they believe clearly demonstrates the team’s awareness of the increased responsibility of managing property for overseas clients. Over 450 leading lettings agents from across the UK attended a glittering ceremony on Friday May 25, at The Lancaster London Hotel opposite Hyde Park where the winners of only dedicated awards for the lettings agency industry were revealed. The awards ceremony was the culminating event of a rigorous and thorough judging process carried out over a four-month period by a panel of industry experts who assessed initial entry submissions before
conducting an extensive review of the entrants, which included hundreds of telephone interviews and mystery shopping exercises. The whole of the judging process was overseen by The Property Ombudsman, Christopher Hamer. The Sunday Times and The Times awards now in its third year as a dedicated competition have become widely recognised as the most sought-after and difficult to win. This year’s competition had more entrants than ever before with over 5,000 offices were represented but only the very best of the best were crowned as winners. In his acceptance speech, Edun said, “ we are pleasantly surprised at this recognition; this is a reward
Firm set to complete N750m estate in Abeokuta
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Nigerian wins best property agency award in UK D
BRIEF
to our commitment to best practice.” He said customer service is clearly crucial to the agency, with “response times for client and tenant queries swift and communication with both consistent. Regular staff training ensures the team is kept up-to-date with industry changes, so they can offer clients a comprehensive property management service, which clearly outshines a whole host of its competitors.” According to him, the firm represents a few Premiership footballers in buying and managing their portfolio. One of them, Nwankwo Kanu said, “When Daniel Ford is involved with your property you can go to sleep, Ford helped grow my London property investment despite my tight schedule.”
ockview Housing Estate comprising 100 housing units being developed by real estate development firm, Sparklight Property Development Company Limited, in Abeokuta, Ogun State capital, is nearing completion, at an estimated cost of N750. On completion, the development will boost the stock of residential accommodation in Abeokuta. It covers six hectares of land located within the Obasanjo hilltop complex, Oke Mosan in Abeokuta. Construction of the estate commenced in February 2011 and would gulp about N750 million at completion in January 2013. The estate being developed under public private partnership (PPP) arrangement with the Federal Ministry of Housing and Urban Development is targeted at medium income earners. The houses are mostly bungalows consisting of two and three bedroom houses, with price ranging between N6 million to N11 million per unit. The project is being jointly funded by Federal Mortgage Bank of Nigeria (FMBN) and Sparklight Property, with prospective buyers encouraged to access the National Housing Fund (NHF) loan through Stallion Homes Saving and Loan Limited, which is the primary mortgage bank (PMB) responsible for packaging NHF Loans for prospective applicants. Facilities provided in the estate include perimeter fencing with well laid out road network and provision for water treatment plant. Other amenities include well designed drainage system, electricity, gated and manned security post, landscaped environment and neigbourhood centre. Speaking at a five-day open house event to create awareness for the estate, Chairman, Sparklight G r o u p , C h i e f To y i n Adeyinka, stated: “It is a strategy to create awareness particularly for the FMBN’s NHF loan. Individuals can own a house with just a down payment of between 10 to 20 per cent of the cost of the unit.” C M Y K
30 — Vanguard, MONDAY, JULY 2, 2012
Insurance BRIEFS Sonoma County health officials applaud US Supreme Court decision
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t least 60,000 Sonoma County residents who currently have no health insurance could soon benefit from the U.S. Supreme Court’s decision to uphold the bulk of President Obama’s health care law, local health officials said. Even as critics of the law vow to turn the court’s ruling into an election year referendum on Obama, local health care officials resoundingly approved the decision. “Fewer people will die, fall ill, or lose their homes because of the lack of health insurance,” said Sonoma County Health Officer Lynn Silver-Chalfin. “Prevention will continue to be supported.” Jerry Dunn, interim director of the Sonoma County Human Services Department, said the decision ensures medical insurance access to 60,000 previously uninsured residents, more than 10 per cent of the county’s population.
Operator urges insurance practitioners to support NAICOM in fixing of commission
A
ll the various arms of the insurance industry have been urged to support the National Insurance Commission, NAICOM, in the fixing of commission for insurance intermediaries. The various arms which make up the insurance sector are the Nigerian Insurers Association, NIA, Nigerian Council of Registered Insurance Brokers, NCRIB, Chartered Insurance Institute of Nigeria, CIIN, Institute of Loss Adjusters of Nigeria, NLAN as well as the insurance agents. Managing Director of FBN Life Assurance Life Ltd, Mr. Val Ojumah who called for the collaboration amongst these various arms stated that the NCRIB, CIIN or NIA do not fix commission but rather commissions are fixed by the regulator NAICOM. C M Y K
NAICOM endorses NIID as protection against fraudsters STORIES BY ROSMARY ONUOHA
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ommissioner for Insurance, Mr. Fola Daniel said that the Nigerian Insurance Industry Database, NIID, would protect Nigerian governments, individuals and corporations from the dangerous activities of fraudsters racketeering fake insurance certificates. Daniel said this during the launch of the database in Lagos last week. He said, “The NIID is of great benefit to all stakeholders in the insurance industry. These include but not limited to the various government at all levels, policyholders, shareholders of insurance firms and would be investors.” Highlighting other benefits of the database, Daniel said the database is an instrument that would become very handy in the control of or fight towards the eradication of fake insurances in Nigeria. It is expected to facilitate easy collation and dissemination of statistical information relating to all classes of insurance in Nigerian and also serve as a platform for easy identification of genuine insurances by security agencies and other relevant authorities, the commissioner added. Daniel also noted that the NIID is coming on the heels of continued effort by the National Insurance Commission, NAICOM, to rid the nation of fake insurers and insurances in furtherance with its Market Development and Restructuring Initiative, MDRI.
“Eradication of fake insurances and the sanitisation of the insurance industry is one of the cardinal objectives of the MDRI. We are of the belief that the launching of the NIID today will go a long way in assisting the commission in this campaign,” he said. Meanwhile, Assistant Corps Marshal, Federal Road Safety Commission (FRSC) Mr. Ademola Lawal gave assurance that the FRSC would support the industry in all possible ways to ensure that the database achieves the purposes for which it was designed and set up and make it the envy of other sectors. According to him, before now the commission has wondered when it would be
possible to get a database of all insurance companies in the country, noting that with the launch of the NIID, this problem has been finally laid to rest. He said “At some of our management meetings in Abuja, we have wondered when there will be a database for insurance companies in the country. We have our own database and now that the insurance industry has a database, it will be easy for us to harmonise them.” He added “The database will assist us to enrich our own database. One of the first things to be captured in the database is motor insurance and when you talk about motor, you are automatically talking about FRSC.” “We are endorsing this
database and we will do everything in our powers to ensure that the database of NIA becomes an envy of all other industries,” Lawal promised. In his welcome address, the Chairman of NIA, Mr. Olusola Ladipo-Ajayi stated his conviction that the database, which he described as a milestone by the industry would help to eradicate fake insurance. He noted that fake insurance is worse than fake drug, reasoning that fake drug affects only one person, the consumer while fake insurance affects both the consumer and other third parties who may be affected by the absence of genuine insurance protection in case of accidents.
L-R; The immediate past Chairman Of Nigerian Insurers Association (NIA), Mr. Olusola Ladipo-Ajayi; Chairman, NIA, Mr. Remi Olowude; Director General/CE, NIA, Mr. Olorundare Thomas and Principal Counsel, Funmi Adeyemi and co, Prof. Moses Adeyemi, during the 41st Annual General Meeting and handing over to the new Chairman, in Lagos.
STI commits to human capital development S
overeign Trust Insurance plc has carried out training on some of its non-executive directors that are noninsurance professionals. In a statement available to Vanguard, the company said the move is to demonstrate its resolve to uphold professionalism and continually develop the human capital resources in the insurance industry in Nigeria. In his flag-off speech, Managing Director of the company, Mr. Wale Onaolapo urged the directors to see the programme as an eye-opener
to the dynamics of the insurance business both at the local and international levels. The participants included the Chairman of the company, Chief Ephraim Faloughi, Mrs. Adefemi Taire and Mr. Kolapo Lawson. Others are Professor Steve Azaiki, and Col. Musa Shehu, (Rtd.) an independent director. Speaking on behalf of the participants, Chief Ephraim Faloughi, OON, lauded the initiative behind the training. He said “The importance of insurance appreciation for non-insurance practitioners,
especially stakeholders of the business, cannot be overemphasised considering the ever-evolving operating standards and principles of the underwriting business in the country at the moment”.
H
e further stated that other insurance companies in the country should emulate such initiative in deepening the quality of the human capital base both at the operational and stakeholders’ level. Apart from providing insights to the participants on the business of insurance, the
one-day seminar also exposed them to the special nature of insurance contracts, principles and concepts while at the same time, make the Directors aware of the extent of their oversight responsibilities and liabilities associated with insurance business. Another major highlight of the seminar was to ensure that the participants are able to formulate policies that are based on sound insurance principles and other provisions of the insurance law for the smooth day-to-day running of the business by management.
Vanguard, MONDAY, JULY 2, 2012 — 31
Insurance BY ROSMARY ONUOHA
BRIEFS
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r. Remi Olowude has said that he will refocus the Nigerian Insurers Associating NIA to win support and respect from all stakeholders in the Nigerian economy, particularly the Executive and Legislative arms of government, the Judiciary as well as the Nigerian Bar Association (NBA). Olowude who was elected the new Chairman of the NIA at the annual general meeting of the association last week said during his acceptance speech that he will improve the quality of insurance education and practice in the country. He said “I will focus on building better platforms of communication between NIA and all NIA-member companies; working with my predecessors in office to move NIA to the next level; improving relationship between NIA and its regulatory agencies, including NAICOM, Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC) and the National Pension Commission (PENCOM); collaborating with other bodies in the trade industry to deepen insurance penetration in Nigeria as well as promoting ethical standards amongst NIAmember companies and the larger insurance industry to earn the respect that we honestly deserve.” Olowude said that all around us, we see challenges and opportunities that abound in our industry and the nation’s economy such as
Health Care Ruling Sends Insurance Stocks Down, Hospital Shares Up
E L-R; Company Secretary, Mrs. Sarah Osedo; Chairman, Chief Samuel Adegbite and Managing Director, Mr. Tunde Oshadiya all of Oasis Insurance Plc at the 19th Annual General Meeting of the company held in Oyo State.
New NIA Chairman pledges to refocus association restrictive laws on insurance practice; issues of multiple taxation; inefficiency of the power sector; as well as Nigeria Content Policy on Oil and Gas. Other challenges, according to him, are ensuring the workability of the Market Agreement; ensuring greater insurance awareness and penetration as well as migration to IFRS and, in particular, the new Enterprise Risk Management System which is meant to engender good corporate governance, and promote stability and growth of the industry. Olowude said “We shall look more inwards to take advantage of the untapped
potential demand for insurance in Nigeria, for this is a major step to engender the relevance of our business to the growth of our nation.”
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owards achieving this goal, Olowude said “We shall take deliberate steps to encourage greater collaboration among our members and all insurance practitioners. We should see one another as collaborators even as we encourage healthy competition. To actualize this laudable and desirable goal, we hope to institute ‘Insurance Joint Sessions’, which will bring together all insurance sector
groups. The forum will serve as a platform for deliberations on critical industry issues. It is proposed that the sessions be chaired by respected elders of the insurance industry, either jointly or on a rotational basis.” He stated that the NIA, as a trade group, has the primary responsibility of protecting the interest of its members, adding “To this end, we shall utilize our collective knowledge, strength and willpower to fulfill this mandate. In addition, we shall unrelentingly promote awareness and education of insurance among the populace.
Aiico Pensions undergoes rebranding BY RITA OBODOECHINA
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anagement of AIICO Pension Managers Ltd has said that the company is undergoing a rebranding process aimed at bringing it closer to its customers. Managing Director of the company, Mr. Eguarekhide Longe, who made the assertion during a chat with media men in Lagos, said that the company is committed to delivering improved services to its wide range of customers, ensuring its resources are adequately deployed in meeting the needs of aspirations of the customers. Longe said, “You influence their right of choice by delivering what is important to them. As a responsible
organisation, we know that there are key things that retirement savings account holders look up to. They want good service, good investment returns, and they want to be able to reach their pension managers anytime as well as being able to have access to their accounts whenever it is required.” Longe said that as a manager of a business, the best they can do is to make sure they address all these, adding “All we can control is the service we render to people and they will be the judge of how they decide, either to stay or move on. But we are reasonably assured that with the kind of platform we have built, and accelerating onto, we will make positive impact every step of the way.”
While assuring of the strength of the company, Longe said that it has no plans to merge with any other pension fund administrator because the company has a strong heritage, is adequately capitalised and would remain a stand-alone company for a long time to come. He said, “We are going to be here for the long haul, we are not going to merge. We are going to stand alone. It will be absolutely naïve for us to say we are not ambitious; we have a very strong heritage. As for as legacy fund is concerned, AIICO Pensions fund managers is not dependent on legacy fund. We are a strong player in that segment of the market.” Speaking on rebranding of the company, Longe said that the objective of the
transformation is that the industry wants individuals to be able to identify an AIICO pension managers role in the industry, as this is the cost of how and the extreme in which customers are being held. He said “You will see some innovation soon. It is enlightened self interest that you get more people employed, we are not going to go out to get more people employed but we will support the initiative that ensures that there are more jobs happening in this country in our own little way.” “We are fund managers and we can’t tell you what investors are looking for, we can’t put money yet, but we can be with you, because we are there in some kind of listening or advisory capacity.”
quities analysts at Goldman Sachs, an investment bank, say hospitals are “winners” in the U.S. Supreme Court ruling on President Obama’s health care plan. A commentary published by the firm predicts that the year 2014, when many provisions of the health care law are in place, should be a good one for hospital companies. Goldman says hospital stock prices will probably rise. Equity analysts at other companies say the new law will make health insurance more widespread and that will cut the financial burden on hospitals from treating indigent patients. Goldman says the overall impact on healthcare companies will be “modest.” However, stocks of health care insurance companies declined shortly after Thursday’s ruling. While insurance companies will be getting many new customers, investors may expect that on balance, new regulations could hurt insurance industry profits.
AIG to revive AIG name; drop Chartis, SunAmerica names
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ailed-out insurer American International Group Inc. will resume using its brand name in public in a move to recognise the company’s turnaround, Chief Executive Bob Benmosche said last weeek. AIG, which received $182 billion in government bailouts during the financial crisis, has all but shunned its own name for years. Not only did various AIG units reorganise under rebranded holding companies, at one time employee ID badges did not even identify the company by name — a measure, Benmosche has said, to protect employee safety. But with recent advertising tests showing higher response rates and lower customer acquisition costs for AIG-branded products, the company said it was time for a change.
C M Y K
32 —Vanguard, MONDAY, JULY 2, 2012
C M Y K
Vanguard, MONDAY, JULY 2, 2012 — 33
Interview
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r. Romeo Itima is the Managing Director of Global West Vessel Specialist Limited, a company responsible for maritime security and surveillance in Nigeria. An experienced United States trained Master Mariner, he has garnered over 30 years experience in many aspects of marine operations, especially intelligence gathering, surveillance, maritime security and vessel operations, having been actively involved in similar operations in the United States. He has also won several laurels in maritime/ marine security, safety and vessel operations both nationally and internationally. In this interview with MICHAEL EBOH & DAPO AKINREFON, he declares that the input of private experts is required in the maritime industry for Nigeria to fully harness its maritime potentials.. Excerpts: How did you get involved in Nigerian maritime industry? Maybe I should start from the beginning. I grew up in Escravos where five of my uncles were pilots. I was still young when I learnt to navigate a ship. I later became a seaman and from there moved on to foreign countries. I grew up in a maritime environment. When I went to the United States, it was to further my education and come back to join my father’s job. That was my intention, but for some reasons, I stayed behind and joined the US Master marine. In 2002, I came for a visit to Nigeria, and at that time two of my cousins were involved in the maritime industry and I said, ‘let me go out with you guys and see.’ When I went out there, it was wide open – nobody was in control and I asked who is in control? I was quite surprised that this country was left open like that. I said what is happening? Nobody knew what was going on, I mean anybody could just do whatever he or she wanted. At that time I met Senator Diffa, so I told him we have a problem in Nigeria, and he asked me what the problem was? So I told him. I said this is the problem. I explained everything to him. I said Nigeria is left open and anything can happen either to this country, or somebody may hide explosives or bombs and take to any other country that could cause large scale disaster. This could be hung on Nigeria. He did not quite understand my explanation. So I took him straight to the company I was working for in
•Capt. Romeo Itima
Nigeria needs experts to standardise maritime practice – Captain Itima the United States. I took him from point to point. He said he didn’t know that we had such things, and I said, ‘don’t worry, I am coming back to Nigeria, and I will take you to places where we have almost identical things as we have here.’ So, when I came, I took Diffa and travelled round the country. Now he saw the other side of the story. It is very hard to understand it if you are not part of it, that’s what I am saying. Now, Diffa helped – the first human being that ever took the case to OBJ was former Minister of Transport, Abiye Sekibo. Diffa took me to him and when I was talking, he was just looking. I said there are ships out there that NPA doesn’t have records of, NIMASA doesn’t have records of – nobody has records of them. He said this is not true, I said yes, it is true. He said, ‘go and bring four names and be sure the ships were in Nigeria.’ In two days, we went back with hundred names, from the time they arrived to the time they departed. When I showed him, he was so surprised and said I should
give him one week for him to do his own findings. He found out that NPA did not even understand what he was talking about. It then he knew we really had a problem. He was the man that took our proposal to OBJ, and OBJ was the first person to put his signature on that project. Only God knows if we can repair the things that have gone wrong. What and what are the things you said have gone wrong in the maritime industry. Take, for example, the crime of illegal bunkering. What they’re doing now is not illegal bunkering; it is theft of crude oil. They hijack and steal oil from ship. The word bunkering came in 1984, in Idiagbon’s time – when I came home briefly, I had worked with the then NSO, training them how to search ship, what to look for. That was the time of illegal bunkering. What happened at that time was that people could use canoes to load whatever kind of oil and bunker all the ships inside the port. Idiagbon was
What they’re doing now is not illegal bunkering; it is theft of crude oil. They hijack and steal oil from ship
about to stop that. That was the world of illegal bunkering. At that time it was the right word, but now it is not. A ship must have bunker; if you drive from here (Lagos) to Cotonou you cannot come back without refueling your car. All ships that come to Nigeria must bunk, but though there were licensed people at that time, the unlicensed people were more, and the licensed ones that were doing it right faced difficulties because the unlicensed ones were selling more cheaply. That was the problem at that time; that was far back in ’84. It was a little crime then, but slowly the country was bleeding and these people graduated into what they are today. Now it is hard to stop, but it has to before Nigeria turns into something else. Now, oil theft is the major problem for the country, financially. It is an organised crime; there are little guys, medium and the top. The JTF has been reported to have set fire on an apprehended boat and some people may have thought that it was jungle justice, but the truth is that these people are so powerful that going through the traditional channel of the court to prosecute them is very hard. So that could be the kind of message that maybe they would listen to. They are usually considered a source of
•Capt. Romeo Itima
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hazard to the environment, because they cause erosion, oil spill and all kinds of problems. So something has to be done. Where we are by now with the NIMASA, if the support we need is being given, I think we would be able to solve this problem. What is the support that you need? We need support from the military, journalists like you, politicians, and oil companies. If they support our project the present problem would be easily taken care of. Now, all of you probably know that NIMASA has awarded coastal security contract to Tompolo, and that Tompolo is an ex-militant, and all that. That is not support; it is a propaganda tool to discredit the intention that we have. If you look at the CAC, I mean these people that are writing this have people almost everywhere. If you want to know who are the shareholders of Global West and you’re asking me you’re doing injustice to yourself; go to the CAC and see who are the people behind this company. People like Senator Diffa, nobody is mentioning them; somebody like Rear Admiral Omu, nobody is mentioning them. Let’s look at this positively. For the magnitude of this kind of job, you would wonder if these guys can do it. The other thing is that on the application we were asked how much money we were going to invest to justify what percentage we were to receive. That is why you saw we’ve invested as much as N120m. At the end of the day it would come out in the news that the Federal Government is going to award contract for this much money, but where do they get these facts from? These are some of the things we want to set right. We don’t have to amend things; tell it as it is; there’s nothing to hide when we’re talking about the nation. We should report the things that would promote our nation; so, let’s take our nation before ourselves. Since we (Global West) started some persons are owing NIMASA almost about $200m, and if they’re owing NIMASA $200m then they would be owing NPA three times that amount. C M Y K
34 — Vanguard, MONDAY, JULY 2, 2012
Micro-Finance BY PROVIDENCE OBUH
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icrofinance Banks (MFBs) are basically known to perform financial intermediation, that is, servicing or financing the Deficit Economic Unit through the resources derived from the Surplus Economic Unit and at reduced interest rate. Unlike the commercial banks, they provide financial services such as credits and financial advisory to the active poor who ordinarily would not have access to such services due to its perceived characteristic risks level. A financial analyst who spoke with Financial Vanguard said that the recent past experiences of microfinance banks has led to the loss of confidence in the bank, placing them on a tight spot. According to the analyst, Manager at Novel Microfinance bank Mr. Princewill Uruakpa, “MFBs are still facing the problem of inability of customers to pay back loans, coupled with the bias created by the closure of several microfinance bank.” Uruakpa explained that customers are bias about MFBs, consequence to the Central Bank of Nigeria’s revocation of licences of majority of the banks as a result of their inability to meet capital base. In addition, he pointed further saying “given that our environment is so dishonest generally, even when you are
Past experience places MFBs on tight spot telling the truth because somebody has lied somewhere nobody wants to believe you. “When you talk of microfinance, people see us as thrift homes or corporative homes where you go to make loan application and they will grant you loan for a period of two weeks. But actually the whole idea behind Microfinance is for the licenced bank to be able to mop up all the money which we call micro money from the system, mostly from market women.”
and not to borrow, so we can send our marketers to their shops to do daily collection from them. And then the marketer will pay the money into the banks accounts and
return the teller the next day. They have a pass book the only time they come to the bank is when they want to withdraw,” he said.
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peaking on Novel Microfiance Bank, he said “The idea behind our own arrangement as a bank, is to encourage the less literate, we have various accounts, you can even open an account with N100, then you can encourage a pepper seller or tomato seller to be saving N100 everyday which will amount to N3000 per month. “By the time the woman trade for three years you know how much she would have made, So that is the idea behind micro finance, the ability to mop micro funds from market places. “However, some customers have sense interest to save
Man who sells roasted fish at Agege. Photo by Folake Odebiyi.
5,000 SMEs to yield 8m jobs by 2015 — SON BY PROVIDENCE OBUH
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he Standard Organisation of Nigeria (SON) has announced plans to involve 5,000 Small and Medium Enterprises SMEs through capacity building by 2015, an initiative to create about eight million jobs in the country, from the sector, says the Director General of the organisation, Dr. Joseph Odumodu. Odumodu made the disclosure while addressing pressmen at an event organized by stkeholders to seek way forward on how to boost trade among African countries. He said, “In the next three years, our target is to work with 5,000 SMEs in Nigeria, this is because in Nigeria today, there are over 17 million SMEs and if we are able to get a critical mass C M Y K
involved, by building their capacities on ISO 90001 and ISO 22000 Food Safety Management, we would have contributed significantly to job creation. “Imagine if half of those SMEs are able to employ one person per company, we
would have created an additional eight million jobs in Nigeria.” Based on collaborations, he said that the organization has started working with the Commonwealth Secretariat on 250 SMEs. According to him, “we are
aware that SMEs are the engine of growth in Asian economies, especially in the Chinese economy. So if we are able to mainstream our SMEs to be the driver of change, then we would be on the right track to developing our economy.
Ekondo MFB introduces e-payment BY JOHNBOSCO AGBAKWURU, CALABAR
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ne of the Micro finance banks in the South-South zone with its headquarters in Calabar, Cross River State, Ekondo MFB has introduced e-payment in the bank. Chairman and Chief Executive Officer of the bank, Dr Asuquo Ekpenyong who disclosed at the launch of epayment system by the bank said the measure was to make
their services available to the people at the grassroots. Ekpenyong said the epayment system introduced by the bank was the first of its kind by any micro finance bank in Nigeria. He explained that it was meant to provide enabling environment for the bank’s customers across the state to enjoy the services offered by bigger banks. We want our customers to enjoy the same measure of services offered by other
banks anywhere they are,” he stated, adding that the new system was one of the expansionist schemes of the bank aimed at providing efficient services to its customers. Ekpenyong said that before the end of the year, seven additional branches of the bank would be opened at the central senatorial district of the state to make their services available to the people at the grassroot.
BRIEFS Nam Micro-Loans Reach ‘Alarming’ Proportions
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Y the end of last year, Namibians owed registered micro-lenders in the country in excess of N$1.5 billion, about 34 per cent more than they owed them at the end of 2010. The latest figures released by the Namibia Financial Institutions Supervisory Authority (Namfisa) are a cause for concern, economists said. “Micro-lending is growing faster than short-term borrowing at banks and I would suspect that this money is used to finance consumption expenditure,” Namene Kalili, FNB Namibia’s research and competitor intelligence manager, said yesterday. Simonis Storm Securities analyst Rudolf Kuschke said total micro-lending at the end of 2011 represented about 3,4 per cent of total credit advanced by commercial banks. As such, the amount is relatively small.
Senegalese government urged to subsidise microfinance institutions
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ormer Senegalese microfinance minister, Mrs. Soukeyna Ndiaye Ba, urged the government to subsidise microfinance institutions to support deprived populations, especially women. Mrs. Ba, who is the chairperson of Women, Development and Enterprise in Africa (FDEA), said at a conference on microfinance and development in Dakar that microfinance was aimed at enabling the poorest to earn a living in a dignified manner on the basis of human rights and having the right and possibility of accessing food security. “The capacities and knowhow of the deprived populations must be strengthened to enable them to take their own destiny into their hands, to reduce their level of poverty and vulnerability by facilitating access to financial services and to enable the poorest to bring about real changes in their lives,” she said.
Vanguard, MONDAY, JULY 2, 2012 — 35
“The time is a quarter to mid-night”. Dr Burlough, the father of the Green Revolution. In one corner of Cross River State, raw rubber production, which should be at its highest during the rainy season, is dropping. Reason; a paramount chief in the area died recently and ten human heads are needed before he can be buried. Two headless bodies in one farm had sent all the farm labourers, for miles around, refusing to harvest rubber. It is quite possible that by the time the remaining eight scalps are collected, the rubber season will be over and Nigeria would have lost millions of dollars in foreign exchange. A farmer with large plantation of both rubber and palm products is now in a dilemma about how to get help which is now unavailable at any price; meanwhile the local police look the other way. Unfortunately, it is not just rubber production which is suffering from inadequate attention, farmers are reluctant to go to any farm in the area – irrespective of the crop involved.. While the death of paramount chief is a rare occurrence, what happens to millions of farmers routinely suffer from banks in ways that are simply pathetic. Presented below are the details of what started as an agricultural loan, urgently required to save a catfish crop from perishing. The bank refused the application for agricultural loan and instead offered a personal loan –
The hypocrisy of our agricultural policy -1 (A case study) which carries higher interest rates. Read and cry for our beloved country because this is real. Facility type: Term Loan Facility Amount: N750,000 (Seven hundred and fifty thousand naira only) Purpose: To support working capital requirement for venture into a new fish farming project. Repayment Source: Repayment shall be from your business inflows. Repayment Terms: Monthly repayment of interest thereon while principal repayment will be included in the monthly repayment after the moratorium of 3 months. Pricing: Interest rate: 27% p.a (Please know that interest rate is variable; depending on prevailing market conditions). Processing fee: 0.25% flat Management fee: 0.75% per quarter Commitment: 1.00% C O T: N5.00 per mile. Security: Lien on original Deal Slip of N3 million only with the Branch. Personal Guarantee of a Third Party supported with notarized statement of net worth. It requires no PhD in mathematics to calculate that the lender is paying about 36% for an agricultural loan.
That makes Nigeria the worst country in the world to invest in agriculture. Thus, when the current Minster for Agriculture came into office exclaiming about the N1.2 trillion we spend annually importing food, one is forced to ask him if he has looked around Abuja where the saboteurs of Nigeria’s agriculture reside and work – including Aso Rock. First, the readers, and I hope they include the Governor of Central Bank, the Federal
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So, the risk of default, which banks use as an excuse for denying agricultural loan, was virtually nil. Yet, the fish farmer was forced to take an agricultural loan at these Shylock rates. Furthermore, the bank sent a representative to the site who saw that the fish farmer had invested over ten times the amount of loan requested. He had fish ponds already stocked with fish, five giant water tanks, three generators, bags of fish meal; and staff. Above all, he lived
A farmer with large plantation of both rubber and palm products is now in a dilemma about how to get help which is now unavailable at any price; meanwhile the local police look the other way.
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Minister for Agriculture, the Coordinating Minister for the Economy, the Senate and House Committee members on Agriculture, and, if he has time to read, President Jonathan, will notice that the lender had more collateral with the bank than the facility for which request was made.
on the premises and he is a public figure – not one to abscond because of N750,000. Second, the bank did not even pretend not to know that this loan was sought for an agricultural project, since it acknowledged that the purpose of the loan was for working capital to promote a
fish farm. Third, every condition known to honest bankers for granting a loan – including adequate collaterals had been met by the lender. These are the same banks which allow the “high and mighty” to collect loans and release the collaterals before the loan is paid up. Finally, the farmer had been a customer of the bank and had previously taken a bigger loan to purchase a personal car and he had serviced the loan without blemish completely. So his record with the bank had been exemplary. Suddenly, he is being taken to the cleaners because this time it is a request for an agricultural loan. Yet, this is not an isolated case. Millions of farmers are placed in this untenable position which makes nonsense of official claim of support for agriculture. If the truth must be told, government does everything, in collusion with bankers, to discourage farmers. It is a fact that, no single bank, in Nigeria, had given out, in any year, all the agricultural loans for which provisions were made. Instead of providing agricultural loans, they annually pay the penalty for depriving the agricultural sector the funds required to increase the land brought under cultivation and the aggregate yield of food items nationwide. The Central Bank had been in almost criminal conspiracy with the banks to deprive farmers of funds required for more than three decades.
BUSINESS & ECONOMY
JPMorgan keeps up suspense over metal exchange sale T
op shareholder JPMorgan is reluctant to vote in favor of a 1.4billion-pound offer for the London Metal Exchange from the Hong Kong stock exchange, sources familiar with the matter said, and the deal could fail if smaller members also hold out. Many smaller shareholders have voiced objections to the takeover of the LME, the world’s largest marketplace for metals like copper and aluminum. If the deal falls through, the potential value of the exchange could fall below 1 billion pounds. Three separate sources associated with the deal said that the bank was keeping the metal exchange community guessing on its stance in the voting due by the end of July. None wished to be quoted by name. JP Morgan, which has kept
publicly silent on its voting intentions while many other shareholders have declared their position, declined to comment. The LME also declined comment. Sources said JPMorgan had preferred U.S. commodities giant InterContinental Exchange , which lost out to Hong Kong Exchanges and Clearing in the final stage of an auction that started last September. “They fell strongly behind the ICE bid, they felt it was better suited to their own business model,” a senior executive close to the matter said. If the deal with HKEx is scuppered, ICE could re-enter the fray but would probably offer less than the current Hong Kong proposal, equivalent to around $2.2 billion. “Everyone has a Plan B,” said one source at a shareholding company. “But if
this sale fails it will destroy the LME’s value. 1.4 billion pounds is extracting the maximum value from the LME, and it will be worth less than one billion if the sale doesn’t go through.” HKEx investors have voiced concern the exchange is overpaying for the LME, which made a net profit of just 7.7
million pounds last year due to its policy of restricting profits to keep fees low for its member-owners. Many shareholder members who own and use the 135-year old exchange fear a sale might alter its unique, complex structure of futures trading and end the low fees system. Due to a voting structure
designed to preserve the influence of smaller shareholders - often industrial users and producers of metal - the deal could fail if many of them oppose the bid, which has to be approved by 75 percent of shares and 50 percent of shareholders. The largest shareholders are banks.
FG urges service providers to ensure smooth implementation of Number Portability
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he Minister of Communications Technology, Mrs Omobola Johnson, has urged telecommunications service providers to ensure smooth implementation of Mobile Number Portability (MNP) in Nigeria. Johnson made the plea in Abuja at the opening of the international forum on Mobile Number Portability
(MNP) implementation and management. The minister was represented by the Deputy Director, Telecom and Postal, in the ministry, Alhaji Ahmed Gumel, at the forum, organised by BSP Media Group in conjunction with Nigerian Communications Commission (NCC). She said that the introduction of MNP in the Nigerian market was a
welcome development and urged the organisers of the forum to adequately educate stakeholders on the requirements for the implementation and their roles. Johnson said that the benefits and code of practice should be clearly defined to enshrine confidence in the telecoms sector. C M Y K
36 — Vanguard, MONDAY, JULY 2, 2012
Agric BRIEF Shonga Farms Holdings, Austravia to commence export of cassava chips to China.
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wara State’s emphasis on value chain management in agriculture has paid off as Ireti Farms, under the auspices of Shonga Farms Holdings, in partnership with Austravia of Australia, is to commence export of cassava chips to China. The first batch of 6000 tonnes is expected to go out in the next two weeks with Shonga Farms, in which Kwara was a 25 per cent stake given additional power to source for additional cassava from outgrowers in the state as coordinating body . This was disclosed at an interactive session between the State Governor, Alhaji Abdulfatah Ahmed and a delegation of Austravia, Exporters of Dried Cassava Chips, led by its Chief Financial Officer Mr. Sam Popilko, representative of Hon. Minister of Agriculture, Chief James Awoniyi and the Chairman of Shonga Farms Holdings, Mr. Tope Daramola at the Government House in Ilorin. Speaking on the initiative, Mr. Sam Popilko said as at today there is more than a million tonnes per day requirement of cassava in China ready to be explored. According to him, “the glut of the produce in the Shonga Farms necessitated the new deal. The first batch of 6, 000 tonnes will be exported in the next two weeks”.
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peaking on the success of the Shonga farm initiative, the Minister of Agriculture, Dr. Akinwumi Adesina, represented by his consultant, Chief James Awoniyi, said “Kwara State is very strategic to the federal government initiative on cassava export. “ Kwara has the foresight with the creation of the Shonga farms Holdings. It was not very clear to many people at that time when Kwara started this and probably a lot of Nigerians saw it as a wasted effort. But sir, cassava will surely become the foundation for the economic development of this State and Nigeria is waiting.” With this initiative, the Minister added, Kwara is poised to taking over from Thailand as a major exporter of cassava. C M Y K
BY JIMOH BABATUNDE
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s Abia state sets aside N1 billion loans for its farmers, it has been revealed that 121,000 farmers in the state will be benefitting from the Federal government’s Growth Enhancement Support Scheme (GESS) this year. Minister of Agriculture, Dr. Akinwumi Adesina, who made this known at the flagoff of the GESS in Umuahia last week , said about 5million farmers are targeted this year under the program. While commending the Abia State government for paying up its counterpart funding, the minister recognised the challenge of creating incomes and increasing “benefits for all our farmers.” The amount of incentives for farmers in the states, he said, is such that “each farmer will pay 50 per cent of N88,000 for each package of inputs.” Recognising that Abia State produces the best cocoa farmer, the minister announced the release of eight new varieties of cocoa hybrids which will be yielding 2 tonnes per hectare as opposed to the 0.04 tonnes per hectare, a difference he said was more than fivefold. “We are distributing 25,000 pods of these hybrids for farmers in Abia State for free,” he promised. Dr. Adesina disclosed that $136 billion would be earned this year from cassava chips’ export. One of those poised to be involved, he indicated, was Eze Philip Ajomiwe. The conversion of residential
Gov. Theodore Orji of Abia State with Dr. Akinwumi Adesina, Honorable Minister of Agriculture and Rural Development during the flagging off of the One Billion Naira Commercial Agricultural Empowerment Scheme in Umuahia. Pix 0006, L-R Chukwu Wachukwu, Chairman of the occasion, Gov. Theodore Orji of Abia State and Dr. Akinwumi Adesina, Honorable Minister of Agriculture and Rural Development, observing the National Anthem during the flagging off of the One Billion Naira Commercial Agricultural Empowerment Scheme in Umuahia. Pix 0107, Gov. Theodore Orji of Abia State (right) with Chukwu Wachukwu, Chairman of the occasion (middle) and Chief Ike Onyenweaku, Commissioner for Agriculture, Abia State (left) during the flagging off of the One Billion Naira Commercial Agricultural Empowerment Scheme in Umuahia.
Abia sets aside N1bn for loans to farmers ...121,000 to benefit from FG’s input supply houses to commercial or the earnings and wages, he reasoned, are inadequate in meeting our agricultural expectations.
FG signs MoU to increase cotton yield per year BY VICTORIA OJEME
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BUJA: The Federal Government has signed a Memorandum of Understanding (MOU) with an Indian company, West African Cotton Company Limited (WACOT) to increase cotton yield by 400, 000 metric tons per year. The MOU also provides for increase in the export of cotton lint by 100,000 over a period of four years. According to the terms of the MOU exclusively obtained by Vanguard in Abuja, WACOT is mandated to supply certified cotton seeds to cotton farmers through the National Cotton Association of Nigeria (NACOTAN). Details of the MOU signed between WACOT and the Federal Ministry of Agriculture and Natural Resources, provides for, “increase seed cotton
production to at least 400,000 metric tons over a period of four years with the use of Good Agricultural Practices, Certified Seeds, recommended dosage of Fertilizers, Bio-Fertilizers and Crop Protection Chemicals etc. “The Client and Investor will produce adequate quantity of Breeder, Foundation Stage 1, Foundation Stage 11 and Certified Cotton Seed to achieve the seed cotton production of at least 400,000 metric tons over a period of four years” “Increase the Export of Cotton lint by 100,000 metric tons over four years; Provide best practices /processing techniques and market access for Nigerian cotton” “The development of the required minimum quantities of Breeder and Foundation Stage 1 Seeds for the
Chukwu Wachukwu, a consultant on the loan and chairman of the occasion, wants prospective beneficiaries to “identify
successful implementation of the Project along with, the Investor and Research institutes as per below” the MOU added. As part of its obligation under the MOU, WACOT has unveiled a new set of guidelines to Nigerian cotton farmers, which would significantly advance the achievement of set targets. The guidelines covers, land preparation, planting, fertilizer application, weed management, pest management and harvesting. Confirming this development, Chairman of NACOTAN, Alhaji Hamma Kwajaffa said cotton farmers under this umbrella of the Association are already benefiting from this initiative. He informed Vanguard in a chat that, under the MOU, the Federal Ministry of Agriculture and Natural Resources through WACOT distributes free cotton seed to farmers, while WACOT offers free technical and extension services to farmers to achieve the desired goal of increasing cotton production in Nigeria.
agricultural opportunities in every local government area,” using the input supply system in applying the funds and the off-takers’ system to administer the funds. Wachukwu said Abia State aims at over 62,000 tons of cassava tubers processing as well as 1,750 tons of rice and 2,250 crates of eggs daily.
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he state’s commissioner, Ike Onyenweaku, was expecting agribusiness breakthroughs, stressing that “our extension services will be re-integrated to offer useful services to our farmers.” Onyenweaku noted that a huge investment is coming into agriculture in Abia and this is just about to begin as the state would become of those to reckon with in agricultural productivity. Governor Theodore Orji of Abia State gave reasons for signing an MoU with the Federal Ministry of Agriculture, saying the “MoU will guarantee the collaboration of the federal government and Abia State that will ensure the implementation of the Agricultural Transformation Agenda in Abia.” He stressed self-sufficiency in food production as “a panacea for sustainable democracy and economic growth.”
Vanguard, MONDAY, JULY 2, 2012 — 37
Apointment & Promotions
Aremu elected into IndustrialALL executive council G ENERAL Secretary of the National Union of Textile, Garment and Tailoring Workers of Nigeria, NUTGTWN, and a Vice President of Nigeria Labour. Congress, NLC, Mr. Issa Aremu, has been elected into the executive council of the newly formed global
manufacturing workers union, known as IndustrialALL. The newly formed 50 million member-trade union movement named; IndustrialALL, is a new Global union Federation (GUF) that represents all manufacturing workers in the
world. It is a new merger federation of three hitherto workers’ federations in mines and metal, textile and garment as well as chemical manufacturing sectors worldwide. The historic merger conference of the three
federations, namely International Chemical, Energy and Mines Workers Federation (ICEM), International Textile Garment and Leather Workers Federation (ITGLWF) and International Metal Workers Federation (IMF) and the inaugural conference of the new Global Union Federation took place on Tuesday June 19th 2012 in Copenhagen, Denmark.
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Fom left: Vice Chairperson NLC, National Women Commission, Comrade Funmi Elesho; General-Secretary, National Union Of Textile Garment & Tailoring Workers of Nigeria (NUTGTWN) and Vice President NLC, Comrade Issa Aremu and National Treasurer, NUTGTWN, Comrade John Adaji at a press conference on the state of the nation.
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INISTER of Labour and Productivity, Chief Emeka Wogu, has set up an Investigative Panel to be headed by the Permanent Secretary, Ministry of Labour and Productivity, Dr. Tunji Olaopa, to look into all the issues raised by the Nigerian Economic Summit Group (NESG) especially on the cases of unfair labour practices in the Beverage sector. Chief Wogu announced this development during a visit of the Group led by the former Minister of Information, Mr. Frank Nweke Jr, who is also the Director General of the (NESG). According to him, “It is reprehensible that people can violate the right of property owner because the property belong to the company and in spite of what we know are the International best practices, picketing is allowed but lockup of Companys’ property would amount to impunity. The major mantra of this administration is adherence to the Rule of Law which has touched every aspect of this administration, I hereby set up an Investigative Panel to look into your allegation, the Panel which has one week to submit its report will be headed by the Permanent Secretary Ministry of Labour and Productivity, Dr. Tunji Olaopa. The term of reference
ith his election by 1400 delegates drawn from over 1,200 affiliate unions of IndustriaLL in 140 countries, Comrade Aremu together with five other elected executives from South Africa, Ghana, Zimbabwe and Tanzania represent over one million African manufacturing workers in the new global union. Aremu brings to IndustriaLL his over two decades of activist experience in organizing, collective bargaining, grievance handling, representation and policy advocacy.
Olaopa heads unfair labour practice panel in beverage sector of the Panel is to look at the immediate and remote causes of what happen and come up with solution.” The Minister argued that recent happenings in the labour sector had given force
to the need for a paradigm shift in the labour/ government relationship from adversarial to a friendly and dialogue oriented relationship. In view of this
development, the Minister added that status quo-ante should be maintained by both the Labour Unions and the Beverages Companies alleged as the Ministry of Labour and Productivity had intervened on the issues raised.
Abuja community honours Jephthah T
HE Katampe Chiefdom in the Bwari Area Council of the Federal Capital Territory, FCT, in Abuja, has honoured the former Chairman of the Bayelsa State Peace and Conflict Resolution Committee, Chief James Jephthah with the traditional title of Sardauna Katampe 1. Speaking through the Secretary of the Katampe Traditional Council, Mr. Ismaila Jikoko, the Traditional Ruler of Katampe, His Royal Highness, Alhaji Adamu Diger said the decision to honour Chief Jephthah was in recognition of his immense contribution to the socio-economic development of Katampe Community. He said as a community and Council of Chiefs, the people deemed it fit to honour him because he has been of
BRIEFS CIPM to hold 44th annual confab in October
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he Chartered Institute of Personnel Management of Nigeria (CIPM) has announced plans to hold its 44th Annual National Conference from October 3 5 this year in Abuja. A statement from the Institute, signed by the Conference Organizing Committee Chairperson, Mrs. Banwo Adeosun, said the theme of the 3-day conference is "Restoration of Values for National Development". President and Chairman of Council of CIPM, Mr. Abiola Popoola, according to the statement, expressed satisfaction over the enhancement in the value HR practitioners continue to add in their respective organizations as a result of participation in the robust discussions that are thrown up annually at the annual conference. "The learning benefits derived from this participation have made it possible for HR practitioners to enhance their contribution and make the right calls at the decision table", he adds. The Institute's Registrar/ Chief Executive Officer, Mr. Sunday Adeyemi, noted that besides providing avenue for HR practitioners to share ideas, broaden their horizon, network and learn about the latest developments in professional HR management, the conference will also provide a veritable platform for organisations to expose and exhibit their offerings.
Book on business, national issues for launch
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Former Chairman of the Bayelsa State Conflict and Resolution Committee, Chief James Jephthah, his wife and others after being turbaned as Sardauna Katampe 1 by the Kamtape Community in Abuja. great help to our community including the non-indigene in the area. The Paramount Ruler of Katampe explained that the titled bestowed on Chief James Jephthah “Sarduana Katampe 1” means he is the Peace Maker of the Community, “He deserves the honour because he has
connected the community singlehandedly with light from the National grid, provided water, created employment for our people and has promised to construct a link road from Mpape road to our community. We are still expecting more from him as far as socio-economic development is concerned.”
ALUE Investing Ltd, VIL, has published a book which discusses evolving issues in Nigeria’s business sector as well as other national issues. The book titled ‘Mindset’ is a compendium of structured thoughts on the capital market, banking & finance and integrated national issues; and historical essays and other published contemporary articles, written between 1986 and 2012 by Okan Seye Adetunmbi. According to Seye Adetunmbi, the Chief Responsibility Officer of the Company and Convener of Capital Market Roundtable in Nigeria, the book will be formally presented to the public on Saturday July 21st, 2012 in Lagos.
38 — Vanguard, MONDAY, JULY 2, 2012
Aviation
Cargo clearing agents stop work at Lagos airport community, Shittu said, does not comprise of only licenced custom agents, there are also other people including food vendors, concessionaires that are at the Airport who could be victims of the directives if e n f o r c e d .
STORIES BY LAWANI MIKAIRU & DANIEL ETEGHE
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embers of the Association of Nigerian Licensed Customs Agents,ANCLA, at the Muritala Muhammed International Airport, Lagos, have stopped clearing cargoes at the airport. This is to avoid a face off with the security agents, who the President of the Association said have been mandated by Federal Airport Authority of Nigeria, FAAN,to throw them out of the Cargo village of the Airport where they currently operate. To avoid possible loss of life, the National President of Association of Nigerian License Custom Agents ,ANCLA, Prince Olayinwola Shittu told newsmen that members of his Association have been asked to stay out of the cargo village for now until the problem of forceful ejection by FAAN is resolved. According to Prince Shittu ‘’Like you have heard, there was a directive to Nacho that they should evacuate every body present at the cargo area
The custom agents bemoan the revenue government is loosing by their not working,because they generate revenue for government.,
Associated Airlines acquires 4 more aircrafts ssociated airline has increased its fleet with four additional new aircraft, Embraer ERJ 145 worth about US$30,000,000 million. Disclosing this development during an interactive session with newsmen at the Muritala Muhammed Airport Lagos, the Managing Director of the airline Mrs Cordelia. Ekwueme said that the aim of acquiring the four additional newer aircraft was to render qualitative services to its numerous passengers stressing that the new Embraer ERJ 145 were far more comfortable and reliable to the Nigerian flying public. According to her, the aircrafts will be arriving the country within the next 120 days adding that at present two of the aircrafts are undergoing routine and comprehensive checks by the Nigerian Civil
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L-R, Chairman, Arik Air, Engr. Sir. Joseph Akinola Arumemi-Ikhide receiving his certificate after his Induction as new fellow from the New President, Nigerian Academy of Engineering, Engr. Prof. Ayodele Francis Ogunye during the Nigerian Academy of Engineering's Investiture of the New President held at UNILAG Akoka, Lagos. including license custom agents who are legitimately carrying out their official duty, from past precedence of violence that occurred when similar issue happen here, our members decided not to come to the area to avoid the threat of mass arrest, mass attack and whatever, it is very
important to note that our people did that in order to avert violence and violent reaction.’’ Prince Shittu said members believe that FAAN management may have been misled by his operational people to give the blanket directive. The airport
Aviation Authority ,NCAA, and the US Federal Aviation Administration ,FAA, abroad. She said ”We are enlarging our fleet by adding four new passenger aircraft , we expect these aircraft to arrive the country in the next 120 days and we are also currently evaluating the whole of our passenger fleet and at present two of the aircraft are in NCAA, IATA, FAA approved maintenance facilities undergoing comprehensive checks abroad” “The whole purpose of purchasing these aircraft is to ensure that passenger safety is of most paramount to us and that is why we have taken this step to make sure that we accomplish this on behalf of the aviation industry and the travelling public” she a d d e d .
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Cover BRIEFS MDA season 6: NB’s Maltina offers N7.5m to winners Nigerian Breweries (NB ) Plc said it has reviewed the prize money for this year’s Maltina Dance All (MDA) family reality television show which enters its sixth season with an offer of N7.5million. According to the new arrangement, the winning family will now take home N6 million in addition to a brand new car, while the first and second runners up will take home N1 million and N500, 000 respectively. The MDA is the consumer engagement and experiential marketing platform that the brand deploys to resonate with consumers and the society in general. Speaking, Mr. Ageni Yusuf, Corporate Affairs Adviser, NB Plc at the Press briefing held at its Lagos breweries headquarters, said the Maltina brand is renowned for promoting togetherness with friends and loved ones. He took members of the press through a robust history of the unique consumer engagement platform: “In 2007, Maltina Dance All, the foremost experiential and sponsorship platform of the brand was introduced. The family TV show has no
Sports brands, individuals, others bag awards
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n appreciating their contributions to the development of sports in Nigeria, Sports Brands Nigeria, has put in motion plans to honour notable brands and individuals, whose contributions in the world of sports have enhanced the growth and development of the game in Nigeria. The Awards, scheduled to hold in Lagos July 15, 2012, according to the organisers, have been designed to celebrate companies and individuals, such as First Bank of Nigeria Plc, immediate past governor of Kwara State, Senator Olusola Saraki and Publisher, Complete Sports, Dr. Sunny Obazu-Ojeagbase, among others that had enhanced the nation’s sports development in the past and still remained rather unsung. C M Y K
Continued from page 18 of Africa in 2009 having grown by 17% in 2008 and 23% in 2009, the penetration is, however, mainly through mobile phones. Although there are about four computer Original Equipment Manufacturers (OEMs)in Nigeria ( Zinox, Omatek, Beta and Brian computers), only the first two are in active production. However, they also do not have the capacity to service even a quarter of the Nigerian market. These are mainly why there are no clear cut distinction between telecommunication and Information Technology in the country. In a chat with technology reporters in Lagos recently, Executive Vice Chairman, (EVC) of NCC, Dr Eugene Juwah, noted that from a private sector investment of about US$50 Million in 1999, the telecommunications industry by end of 2009, attracted more than US$18 billion in private sector investments, including Direct Foreign Investment. He also revealed that more than N300 billion was contributed to the coffers of the federal government within that time frame, through frequency spectrum sales, enabling government to plough back revenues earned from the sector for provision of development infrastructure at the various levels of government. CONTRIBUTION TO GDP The impact of this on the economic growth has become i m p r e s s i v e . Telecommunications sector now contributes significantly to the Gross Domestic Product (GDP), which was hitherto dominated by the oil sector. According to Juwah, the percentage share of GDP from the sector rose from 0.06 percent in 1999 to 2.39 percent by 2007. However, it moved up to 2.90 percent in 2008, and 3.66 in 2009. By 2010, ICT had contributed 8.2 percent to the nation’s GDP Meanwhile, estimates by Pyramid Research in a 2010 report, pitched the annual revenue from mobile services between 2% and 7% of African countries’ Nominal GDP while in Nigeria the ratio is close to 4%. Also the Nigeria telecommunications fact sheet released by the United States Embassy in Nigeria in October 2011, noted that “the ICT sector is the fastest and most robust sector of the Nigerian economy, contributing more than the manufacturing, banking and solid minerals sectors
Crises in telecom sector combined”. The fact sheet also revealed a Service Sector contribution to GDP 2010 chart,showing that ICT contributed 25 percent, while Utilities, 17 %; Finance and Insurance, 20%; Transport 15%; Real Estate and Business services, 10%; Hotels and Restaurants, 3% and others, 10%. Meanwhile, if statistics on the fact sheet are anything to go by, ICT investment spiked 700% in 2001 and received double-digit growth every subsequent year. A factor that saw investment rising by 31%
to $18 billion in 2009. GROWTH IMPACT ON OTHER SECTORS Growth in the ICT sector has had significant impact in the other sectors of the economy. The financial sector is perhaps, the one which activities of ICT have impacted positively much more than any other sector in recent times. In commercial banking services, the quantum of transactions is catalysed by ICT, mainly through telecommunications services. It is doubtful if any
bank in Nigeria is not a major beneficiary of the telecommunications revolution. In facilitating banking transactional services, the telecommunications industry has provided the bedrock for the finance industry. Electronic banking facilities such as ATM services, online financial transactions, international credit and debit card facilities, airline ticketing and reservations, are some of the numerous ways that the industry has aided the growth, sophistication, security and quick transactions in the Nigerian financial sector.
From Left: Executive Director, Corporate Services, Mr. Joe Dada; Chief Finance Officer, UACN, Mr. Abdul Bello; Managing Director, CAP Plc, Mrs. Omolara Elemide; Chairman CAP Plc, Mr. Larry Ettah; and Branch Chairman, Nigerian Red Cross, Mr. Onibudo Mobolaji, at the Dulux Let’s Colour Programme of repainting Red Cross Lagos State Motherless and Abandoned Babies Home in Lagos.
Dulux’s Let’s Colour campaign replicates colouring festival in Nigeria E
very year, all over the world, Colouring Festival holds, here in Nigeria the festival had gone uncelebrated. And in parts of the world its been sponsored by Dulux paint, a brand from the stable of Chemical and Allied Products (CAP) Plc. The celebration of the Festival in countries like India, London, France to mention but few and its replication in Nigeria as a campaign to give facelift to monumental buildings is a clear example of the brand’s quest to achieve top of the mind awareness in the paint market. Even though brands aligns to a connecting tool, particularly, marketing communications activities that help push sales and consolidate brand position in its core market segment, the painting of historical buildings as part of the brand’s campaign strategy is a new norm in the field of
marketing. This year, the brand as part its Corporate Social Responsibility (CSR) repainted the Nigerian Red Cross Orphanage for motherless and abandoned babies home in Lagos in a campaign programme tagged; Let’s Colour Nigeria, giving it a face lift, whilst stating that the campaign is going to be an annual event, a brand promise that will definitely stir competition in the paint market, as Dulux had promised repainting other monumental buildings in Nigeria. However, other known brands may take to sponsorship as its connecting tool cultural activities, football competitions and the likes, but overtime, sponsorship infused in campaigns and place branding have become major tool bar to reach a brand’s target. In Nigeria today, companies see various
campaigns as a mechanism to drive their brands. The story of MTN, GLO and Coca-cola as the official telecommunication company and drink for the 2010 world cup and the Nigeria premier league respectively explains the rational behind sponsorships. Like Mrs. Omolara Elemide, Managing Director, Cap Plc, puts it when he gave insights on the reasons for the campaign. She said: “Let’s Colour is an Iconic event for Dulux to paint monumental buildings. We are showing that we care for the less privileged in the society; that is one of the reasons we chose this option.” According to her, “This campaign has been activated in a number of countries since 2010, as partners of Akzonobel in Nigeria we decided to activate it in the country in 2012. And we decided to use our CSR platform.”
40— Vanguard, MONDAY, JULY 2, 2012
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HOW TO REVIVE OUR FAILED ECONOMY demand and grow the economy. Why has CBN’s monetary Policy Rate remained so high? The extremely high current monetary policy rate of 12% and cost of funds to industry at over 20% and inflation targeted by the same CBN Governor at 15% are all glaring indicators of the failure of a monetary policy model, which is eternally fighting the flood of excess liquidity induced by CBN’s substitution of naira for distributable export dollar revenue. While it simultaneously continues to decry the inability of banks to lend to the real sector, because of scarce funds, the current monetary policy model, whereby CBN suffocates the market with its injection of naira allocations for dollar revenue, will inevitably necessitate eternal excess liquidity mop up, The CBN will be constrained to pay as much as 15% for its risk-free borrowings with treasury bills in order to reduce the amount of spendable money in the system; no economy has been known to grow with inflation and cost of funds at almost 15% and over 20% respectively.
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ould the adoption of a different monetary policy framework stem the inflationary spiral? Inflation is a silent plague, which gradually erodes the purchasing power of all income earners, particularly that of the poor. In the context of our economy, the uncomfortable rate of inflation is the consequence of a defective monetary policy model. There has been an average annual rise of 10% in the general price index in the last 20 or so years. This compares unfavourably with maximum of 3% in successful economies elsewhere. Regrettably, the CBN, who has the prime responsibility for establishing price stability, has in reality become the instigator of inflation. CBN has failed to reduce inflation and foster a benign rate of cost of funds so that industries, particularly SMEs can borrow at between 5 and 7% and thereby stimulate rise in employment, create
How can CBN halt naira depreciation in spite of healthy reserves? It will be impossible for CBN to stop the unyielding pressure and continuous depreciation of the naira under its current monetary policy model; this is because, whether we earn more or less dollars, the naira will remain under downward pressure. For example, whenever we earn more dollars, the
only result in a lower price naira whenever we earn increasing dollars. On the other hand, the naira is also under similar pressure when we earn less dollars, as the government may have no other alternative than to further officially devalue the naira, in order to keep their naira revenue projections stable in nominal terms. Once again, the result is too much naira chasing fewer
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This week, we will provide answers to some frequently asked questions regarding inflation, interest rates, and naira depreciation. Kindly read on.
It will be impossible for CBN to stop the unyielding pressure and continuous depreciation of the naira under its current monetary policy model; this is because, whether we earn more or less dollars, the naira will remain under downward pressure
substitution of larger naira allocations for distributable dollar revenue will provide additional cash injections/money creation, which the banks will leverage on to engender a specter of excess liquidity, which can over-subscribe many times over the actual value of dollars offered for sale by the CBN, who controls over 80% of dollar supplies in the market. Consequently, there will always be too much naira chasing limited dollars. Thus, market equilibrium will
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dollars. The only plausible way that the CBN can stem this tide and break the jinx of naira depreciation will be to turn the table of supply and demand against the dollar; this can simply be done when we break CBN’s monopoly of the foreign exchange market, so that distributable export dollar revenue is not unilaterally ‘monetised’ (substituted with naira) before sharing to the three tiers of government. If the instrument of dollar certificate is adopted for this purpose, the naira rate of exchange
would be positively favoured. The erstwhile eternal burden of excess liquidity would be lifted, as there would be no new naira printing/creation for the banks to leverage on; consequently, there would always be more dollars chasing stable naira sums in the system. The naira will become stronger, cost of funds will fall to single middle digit, price of fuel and electricity tariff will plummet significantly, even without subsidy component in their pricing! Transport costs would fall and inflation would recede to lower single digits. The government would save close to N500bn annually from the funds, usually set aside for debt servicing and equally save over N1 trillion formerly paid for fuel subsidy. The government can in fact also earn between 5 and 10% sales tax per litre from the 35 million litres of fuel sold every day (an income of N350m/day.) So far, there is no better plausible argument on ground that would redesign our monetary policy model and rescue our people from the grip of poverty than the one proposed above. SAVE THE NAIRA, SAVE NIGERIANS!
BUSINESS & ECONOMY
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he Federal High Court sitting in Abuja has dismissed a suit instituted against the cash-less policy initiative of the Central Bank of Nigeria. In a suit filed on behalf of eleven Riverine Communities namely, Akpakpa, Ogidigben, Madagho, Ijalla, Kantu, Omadino, Ogheye, Dhege, Ajudaibo, Obaghoro and
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Court dismisses suit against cashless policy Ikoghoro, all in the Delta State, challenging the policy which restricted cash withdrawals and lodgments to a daily limit, the judge, Honourable Justice Balkisu Bello Aliyu held that “the policy directive issued by the
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CONTRIBUTORS Princewill Ekwujuru Naomi Uzor Providence Obuh LAYOUT
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respondents, the Central Bank of Nigeria and its Governor does not contravene the fundamental right of the applicant under section 44(1) of the Constitution of Nigeria as amended or under any section in chapter IV of the said constitution.” Justice Aliyu also stated that “the applicant is not obliged to transact banking business with any bank at all. But where he decides to do so, he must comply with any regulations the respondents issued for the regulation of that sector.” The judge therefore, declared that she found no merit on this suit and it was dismissed accordingly. The judge further ruled “that in as much as the Government will grant licences for the establishment of banks and other financial institutions for the benefit of its people, the choice of whether or not to make use of such institutions is entirely the discretion of the people in other words, it is up to any person (corporate or
individual) citizen or not living in Nigeria to decide to lodge his money in any bank or financial institutions. The individual or corporate transaction with their banks is a civil contract or agreement between the customers and their banks or financial institution. Right to banking or right to transact banking business is not one of the fundamental rights protected by chapter IV of the Nigeria’s constitution of the African Charter on Human and Peoples Rights.”
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t would be recalled that following the introduction of the cash-less policy by the CBN, one Barrister Ayiri Emami, acting on behalf of himself and indigenes of eleven Riverine Communities of Delta State approached the court to challenge the policy praying that: 1) the limit imposed by the Bank was an infringement of their fundamental human rights; 2) the policy directive issued by the Bank and its Governor to
all financial institutions in Nigeria to charge N100.00 for every N1000.00 withdrawn was excessive, punitive, and a breach of the fundamental rights of the applicants guaranteed under the constitution and; a perpetual injunction restraining the Bank from implementing the policy. The CBN, in response to the prayers, affirmed that it issued policy directives to all financial institutions limiting the withdrawals and lodgements as claimed by the applicants but however stated that banks and other financial institutions were also directed to advise their customer to use alternative payments channels available to them, such as the automated teller machines (ATMS), cheques clearance and cards, among others. And that no one was expressively or impliedly deprived of the right to own or use money deposited in any bank or financial institution.