financial vanguard january 7th edition by Vanguard Media Limited

JANUARY 7, 2013

LCCI lambasts FG's N60bn phones-for-farmers policy BY JIMOH BABATUNDE & NAOMI UZOR

he Lagos Chamber of Commerce and Industry (LCCI) have lambasted the federal government over the proposed N60 billion phones-for-farmers policy saying it is a misplaced priority. On Tuesday, Permanent Secretary, Federal Ministry of Agriculture and Rural Development, Mrs. Ibukun Odusote disclosed the federal government intends to spend N60 billion to purchase mobile phones for 10 million rural farmers across the country. She said that the fund had has already been provided and the distribution will commence in the first quarter. Reacting to this development in an interview with Vanguard, the

Chairman, Agric sector of the LCCI and Managing Director of Bama Farm Food, Prince Wale Oyekoya, said the Federal Government’s intention would not make any meanful impact on the lives of the farmers. “Imagine our Federal Government wants to give rural farmers N60b cell phone, is this what our poor farmers need now with the high interest rate of 28 per cent. This is part of corruption we are talking about; it is a way of laundering our money by the federal government. Farmers need working capital and not cell phone, who will be recharging the phones for them? Is it still the federal government that will do that?” he said. According to him, the Nigerian farmers need a single digit interest rate on agric loans, input research and development, tractors, working capital

and other amenities to excel in agriculture, adding that, Nigeria is one nation that is endowed with goodness of nature , wonderful weather, excellent soil texture and great business environment. He urged the federal government to provide basic infrastructure that would make agricultural business venture progress and less stressful, adding that the government should invest more in farmers with a single digit interest rate on agric loans instead of giving out cell phones. On Thursday, Minster of Agriculture, Dr. Adeshina Akinwunmi though denied that the FG was spending N60 billion to purchase the mobile phones, he however strongly defended the policy.Adesina said the Permanent Secretary of the ministry, Mrs.

Ibukun Odusote, was totally misquoted on the issue as there “is no N60 Billion for phones anywhere. The Minister said agriculture today is more knowledge-intensive and they are willing to modernize the sector, and get younger (graduate) entrepreneurs into the sector, “and we will arm them with modern information systems. “Whether small, medium or large farmers they all need information and communication systems. Connecting to supermarkets and international markets require that farmers know and meet stringent consumer-driven grades and standards.” He added “In today’s supply chains, the flow of information from buyers to farmers must be instant, to meet rapidly changing demands. Unless farmers have information at their finger tips, they will lose out on market opportunities.

Continued on page 18

148.8

5.0

2,250.00

+14.00

19.7

0.19

112.40

+1.29

92.99 +1.17 CURRENCY BUYING CENTRAL

L-R: Permanent Secretary, Lagos State Ministry of Special Duties, Dr. Aderemi Desalu, Corporate Affairs Manager, FrieslandCampina WAMCO Nigeria PLC, Mrs. Ore Famurewa, Lagos State Commissioner for Special Duties, Dr. Wale Ahmed and Mrs. Dosunmu, Finance Director, Lagos State Ministry of Special Duties, during the presentation of Peak milk as relief material to internally displaced persons in Lagos State.

DOLLAR 154.77 POUNDS 247.988 EURO 201.3712 FRANC 166.491 YEN 1.7528 CFA 0.2891 WAUA 235.8285 RENMINBI 24.839 RIYA 41.2687 KRONA 26.9921 SDR 237.3553

SELLING

155.27 155.77 248.7891 249.5903 202.0218 202.6723 167.0288 167.5667 1.7584 1.7641 0.2991 0.3091 236.5903 237.3522 24.9197 25.0004 41.402 41.5353 27.0793 27.1665 238.1221 238.8889

CBN Exchange rate as at 4/01/2013

18 — Vanguard, MONDAY, JANUARY 7, 2013

Cover Story

Entrepreneurial Education Revolution: An Imperative for Sustainable Development in Nigeria

LCCI lambasts FG's N60bn phones-for-farmers policy

Continued from page 17 “Our goal is to empower every farmer. No farmer will be left behind. We will reach them in their local languages and use mobile phones to trigger an information revolution which will drive an agricultural revolution.” On why the need for cell phones, Dr. Akinwumi explained that Nigeria has 110 million cell phones, the largest in Africa, but regretted that there is a huge divide as the bulk of the phones are in urban areas. “The rural areas are heavily excluded. For agriculture, which employs 70% of the population that means the farmers are excluded and marginalized. “In today’s world, the most powerful tool is a mobile phone. As Minister of Agriculture, I want the entire rural space of Nigeria, and farmers, to be included, not excluded, from the advantages of mobile phone revolution. The Phone-For-Farmers scheme is part of the Agricultural Transformation Agenda (ATA) of the federal government introduced by the Ministry of Agriculture. The goal of ATA is to add 20 million metric tones (MT) to the domestic food supply, or 5 million MT per year, by 2015, and to create a total of 3.5 million jobs by 2015. According to the Minister the goal of ATA is to transform agriculture to grow food, create wealth and generate jobs. The focus is

Farmers need working capital and not cell phone, which will be recharging the phones for them? Is it still the federal government that will do that?

on expanding domestic food production, reducing import dependency and expanding value addition to locally produced agricultural products. Adesina set out to eliminate decades of corruption in the fertilizer and seed sectors through radical policy reforms, reduce the role of government and expand incentives for the private sector to drive the transformation and modernization of Nigeria’s agriculture. One of such reforms brought about the Growth Enhancement Support Scheme (GESS). The scheme which kicked off last year is a special agricultural scheme of the Federal Government aimed at

delivering subsidized farm inputs to farmers and facilitates a shift from subsistence to commercial farming. GESS is hinged on the use of technology to enhance effective distribution of various farm inputs, especially fertilizers, to farmers. This is in line with government vision of making agriculture the cornerstone of Nigeria’s economy. With the program, Government sought to withdraw from direct fertilizer purchase and distribution, and introduce an alternative system of distribution built on the voucher system. Under the scheme, registered farmers receive e-wallet vouchers with which they can redeem fertilizer and seeds from agro dealers. The GESS is a 3-year scheme and the first cycle was implemented last year. The scheme has been designed to encourage a private sector led market development process, ultimately geared towards improving Nigeria’s competitiveness and food security. Through this scheme, government will subsidize the costs of seeds and fertilizers for farmers by 50%, while providing soft loans to the seed and fertilizer companies and agrodealers to sell their inputs directly to farmers and build their supply chains to get to rural areas. The Minister of Agriculture Continued on page 19

inspired concept of the ‘industrialized specialist’ which has outlived its usefulness to a more dynamic, resourceful and I.C.T based model where skills and creativity takes precedence. Without deviating from the topic of my speech which is Entrepreneurial Education Revolution in Nigeria, I would like to briefly define some of the concept in the topic. WHO IS AN ENREPRENEUR? An entrepreneur is a person who is driven to establish a business to take advantage of the financial opportunities and personal fulfilment offered, by pursuing their own dreams and shaping their own destiny in local, national and

From left: Mr. Jide Adeyemi, Retail and Customer Maketing Nokia, Mr. Olugbenga Alagbile, winner of One Million Naira and Mr. Ladi Oyetayo, Head of Sales Operations, During the Presentation of Prizes to the Winner of Nokia Asha Christmas Millionaire promo in Lagos. Photo: Joe Akintola, Photo, Editor.

Albert Einstein once defined insanity as doing the same thing over and over and expecting different results, while the French classical author, Francois de la Rochefoucauld said ‘ the only thing constant in life is change’. This paper stresses the importance of entrepreneurship education towards enhancing sustainable development in Nigeria. The problems facing the country ranging from high rate of poverty, youth and graduate u n e m p l o y m e n t ; overdependence on foreign goods and technology; Low economic growth and development; among others. This paper therefore argues that entrepreneurship education will equip the students with the skills with which to be self-reliant. The objectives and strategies for r e - d e s i g n i n g entrepreneurship education are also discussed. The paper also recommended that educational programmes at all levels of education should be made relevant to provide the youth the needed entrepreneurial skills. It is also recommended that the government should give adequate attention to e n t r e p r e n e u r i a l development in the country through the provision of good economic environment. So it is on this premise I would like us to see the Nigerian educational system in light of current realities in st the 21 century. A careful look of the current state of affairs in Nigeria reveals that we are in a 21st century economy with a 19th century education system. A system whereby much emphasis is still placed on the conventional classroom environment with much reverence for certificate for graduates who in most cases are trained to be job seekers as evidenced in present high unemployment rate in the land. However, we must accept the fact that times have changed and we must adjust by transiting from the old styled era of Adam Smith

Entrepreneurship on the other hand is said to be the process of planning, operating and assuming the risk of a business.

global economies. I personally define an entrepreneur as anyone who can convert what he loves doing to a moneymaking venture. Entrepreneurship on the other hand is said to be the process of planning, operating and assuming the risk of a business. It has also been seen as a process of creating a unique value. For the purpose of this speech, I would be limiting education to the activity of teaching about a particular subject. Revolution on the other hand has been defined by The Macmillan English dictionary as a sudden or major change, especially in ideas or methods.

Vanguard, MONDAY, JANUARY 7, 2013 — 19

Reactions to “Dango Dangotte, the

face of genuine local or" in invvest estor"

”

ne wonders how Dangote feels with his trucking empire running on dilapidated Nigerian roads. Why doesn’t he use some of his vast wealth to repair some of the roads damaged by his trucking business? Let him put pressure on his political friends to repair the roads. It will be good for his tucking business. (Taro Jojoye)

hank you for the hatchet job you did on behalf of Dangote and the other cement cartels. Personally, I do not believe Dangote is an ideal business man to look up to. He is a monopolist and believes he alone can meet the needs of all Nigerians in terms of the product he produces. Dangote cannot survive without government support and he is always seeking ways of running his competitors out of business in collusion with people in government. I am hundred percent sure he cannot try this in developed economies. He started by importing cement. He got waivers from the government yet complains when others get the same thing. Let him leave Ibeto cement alone because I know that is who you are referring to. The truth is that Dangote is just flooding the market but the people know which product is good. And for your information I don’t work for Ibeto neither do I know who he is but I have been watching closely the

•Dangote happenings in the cement industry in Nigeria and I have been praying that someone breaks Dangote’s hold on the cement business. Go on the internet and see for yourself what people are saying about Dangote’s monopolistics tendencies. Soon the bubble will burst. I rest my case. (Adeyinka Oladejo) The writer undermined his lobbying effort by claiming

that the local industry is capable of exporting cements. If this is indeed true why can’t they embark on exportation instead of arguing for protectionism? If you cannot compete fairly in your local market how do you intend to compete in a foreign market where you may not be able to use political patronage for market allocation. ( Ben Ade)

Dangote cannot survive without government support and he is always seeking ways of running his competitors out of business in collusion with people in government

Reaction to “Nigeria, a nation of sharing, what a nation!”

his your question should be directed to NASS, the truth is that these folks don’t have the interest of the nation at heart, all they are interested in is what will enter their pockets. A situation where a country borrows to finance recurrent expenditure (consumption) is not substainable, at least on a long term basis. The noise about the non full implementation of 2012 budget is never because of the betterment of me and you,it is because less money is made available for sharing among themselves . One wonders what is the future of a country that does not think about tomorrow. Often you hear this clamour for diversification of the economy, but all the noise is on pages of newspapers and televisions. The day the westerners will come up with reliable and more convenient substitute, as they are already working on, that day will mark the end of oil being lucrative, one wonders what will become our fate. (Jackson Kingsely)

Cover Cont. Continued from page 18 and Rural Development, Akinwumi Adesina who introduced the program, described it as the best way farmers can access the direct subsidy of agro-inputs. He particularly explained that the introduction of allocating fertilizer and seedlings directly to benefiting farmers through electronic vouchers to their mobile phones has helped eliminate the activities of middle men who for decades have been preventing farmers in the country from enjoying such subsidy from government. But reports from farmers at the end of the planting season last year show lots of complains from farmers across the country as to their inability to access the subsidy or in some cases getting the subsidized inputs after harvesting. During a tour of five states of Taraba, Gombe, Bauchi, Nasarawa and Benue by reporters sometimes last year, farmers expres their disappointment over the scheme. In Taraba State, the picture was not rosy. The farmers

LCCI lambasts FG's N60bn phones-for-farmers policy complained that they didn’t receive their two bags of fertilizer and two bags of improved seedlings in time. One of them was HammanTukur Baba-Anda, a 72-yearold farmer. He said though he got his two bags of fertilizer, they came late. He lamented that if he had gotten them in time, he would have gotten about a hundred bags of maize instead of the 28 bags he got. “We should have gotten it from January, February to April, but this time it came around June/July. May be it is from you,” Baba-Anda said. Not all the farmers in the state got fertilizer. Out of the 75,000 farmers that got registered for the program, only 22, 000 were able to redeem their allocation, according to the state director, Federal Ministry of Agriculture and Rural Development, Dr Samuel Adaji. The story was slightly different in Gombe State where the federal coordinator of the GES scheme in the state, Mallam Muhammad Umar Deba, said out of the

148,032 farmers registered for the GES program, 144,000 farmers redeemed their fertilizers. “I couldn’t get even a single bag of fertilizer or seed,” said Malam Usman Bangu, an old farmer, in flawless English. But those who got their allocation in the state called for creation of more redemption centers as they said the ones in the state were too small to cater for them.

For Mr. Akin Balogun, the scheme had made the purchase of fertilizers more difficult and urged the government to review its implementation. Mr. Shedrack Madlion, the Executive Director of the Admiral Environmental Care Limited, an NGO, stressed the need to put in place checks and balances to ensure success of the initiative. Madlion observed that the e-

wallet scheme had only succeeded in arousing the farmers’ interest, but its implementation had fallen short of expectation. It was in an attempt to review its implementation and move agriculture away from development program to business that the ministry came up with a modern way of reaching the farmers using new tools like mobile phones.

Skye Bank redeems customers's prizes

ustomers of Skye Bank Plc who have earned Points under the SkyeDreams customer loyalty programme have won fantastic prizes for themselves. These include LCD TV sets, Black Berry phones and Laptop among others. Under Skye Bank Plc’s SkyeDreams programme, customers are enrolled automatically at the end of each quarter upon meeting set criteria. To qualify for enrolment, a customer should maintain a minimum balance of N50, 000.00 on Skye Save, Skye Wise,

Skye Rainbow or a standard Current account, or N150, 000.00 on a Skye Select acc o u n t . Membership enrollment is done at the end of every quarter and it is totally free. Once enrolled, members are sent their log in details via e-mail and sms. Welcome base Points are uploaded immediately after enrollment. To earn Points under SkyeDreams, members must: Have monthly average incremental balance of a minimum N10,000.00 ; Use Point of

Sale (POS) terminal; And use of Internet banking for transf e r s Points earned are uploaded into the member ’s SkyeDreams account real time. However Points earned from monthly average incremental balance are uploaded at the end of month. Mr Adeyemi Aremu, who won an LCD TV set, thanked the bank for the gesture and expressed his commitment to continue to operate his account with the bank.

20 — Vanguard, MONDAY, JANUARY 7, 2013

Business & Economy BRIEFS PHCCIMA elects new leaders in Rivers

ORT HARCOURT Chamber of Commerce, Industry, Mines and Agriculture, PHCCIMA, has elected Emeka Unachukwu as its new President. He is to lead the body alongside Dr. Renny Cookey as First Deputy President, Dr. Emi Membere Otaji, 2nd Deputy President, and Mr. Allison Tene Ogidigen, Financial Secretary. Also newly elected to lead PHCCIMA in the next three years are Mrs Stella Agada as Treasurer, Pst. Oluwatobin Alabi, MD/CEO of The Promise Confectioneries, Ms. Jovita Iroemeh, Chief Oris Onyiri, President of Egi People’s Assembly, Dr. Felix O. Felix, Dr. Walter Otunyo and Mr. Chima Wami. Speaking, Unachukwu promised robust growth for businesses of members of the chambers, while highlighting the focus of his administration following his election as the 55th Annual General Meeting of PHCCIMA. According to him “We want to see a situation where a member who joined PHCCIMA with one million naira but can t now boast of a hundred million in his kitty”, stressing that if that is achieved businesses will grow, employment created, the economy of the state would improve, government would get more taxes and the country at large would also benefit.”

DN Meyer rewards staff

N Meyer Plc, has rewarded some of its employees for long service and loyalty. The ceremony which took place at the company’s headquarters in Lagos, attracted notable personalities and friends of the company. No fewer than eight employees were honoured for a meritorious and selfless service to the company for between 10 to 20 years. They include: Mr. Bankole Babajide Niyi, Screen Printer; Mr. Abuah Robinson, machine operator; Mrs. Ajayi Oluwaseun Adeyemi, Research and development Chemist and Mr. Ngaluwa Joseph Osita, machine operator for serving the company in the last 10 years without blemish.

SON, LCCI, stakeholders condemn Customs proposed bill BY GODWIN ORITSE

TA N D A R D Organisation of Nigeria (SON), the Lagos Chamber of Commerce and Industry (LCCI) and other stakeholders in the Nigerian maritime industry have condemned the proposed Customs and Excise Management Act saying that “it is draconian” Exposing the dangers in the bill at a stakeholders forum hosted by the Maritime Industry Advocacy Initiative (MAIN) , a logistics expert, Mr. Lucky Amiwero, said that the bill is against international convention with regards to appealing or protesting a case of misdemeanor of Customs officers. He said that Section 276 of the bill is at variance with independent dispute mechanism on appeal procedure as contain in the World Customs Organisation (WCO) kyoto convention. He explained that the international trend is to modernize Customs systems so as to minimize their disruptive effect on legitimate trade, as much as possible through optimizing available technology that would neither compromise the traditional objectives of Customs control nor the flow of legitimate

L-R, Mr Ogunmoroti, Customer Business Manager Kaduna, Cadbury Nigeria Plc.; Lucky Winner of 1million Naira, Aminat Ahmed; Mrs Anike Faseyitan, a Distributor and Mr Akomen Omijeh, Corporate Affairs Manager, Cadbury Nigeria Plc. during the Cadbury Yummy Life Promo Prize Presentation in Kaduna. trade through simple, transparent, consistent and predicable application. Amiwero noted that in the proposed bill, the Board of Customs will have no other way than to look into the welfare of men and officers of the service as against churning out policies for the agency to execute. LCCI’s representative, Mrs. Julie Ogboru, stated that the bill if passed into law

in its present state is capable of derailing the economy as everybody including the President will become answerable to the Customs. She noted that the bill if not changed or amended will not only affect the present generation of freight forwarders but the next one. For Fred Akhokhia, Deputy President of the Association of Nigerian Licensed Customs Agents (ANLCA) said that the

promoters of the proposed bill have a hidden agenda when they putting the bill together adding that it will not be in the best interest of the nation if the bill is allowed to go in its present state. Speaking on behalf of the National Government Approved Freight Forwarders (NAGAFF) Dr. Boniface Aniebonam said that a part of the law that stipulate a twenty year jail term for offenders is worrisome.

Civil servants demand prudent fiscal management By CHINEDU IBEABUCHI

ivil servants in the Federal Ministry of Power said that the challenges of poor budget management can be minimized by putting in place proper and timely budget planning and an effective budget implementation system. Issuing a communiqué at the end of a training programme on Public Financial Management and Expenditure Control organised for the staff of the ministry in Lagos, they also suggested that ensuring strict adherence to Public Procurement Act Provisions will be a good strategy for sustaining sound

procurement activities in Public Sector. In addition, they suggested that there should be proper and adequate documentation of receipts of government revenue and that there should be an effective control system to safeguard government revenue. Further, they suggested that erring Public officers should be disciplined, there should be regular training and retraining of Public Officers, anti-corruption institutions should be strengthened, and there should be conducive working environment for Public Officers, among others. The participants said if the suggestions in the

communiqué were followed, they would result in dynamism, sanity and improvement in public financial management and expenditure control. Earlier in her welcome address, the Managing Consultant of Lighthouse Consulting Limited, Mrs. Rebecca Chijioke said that sound arrangements for organisational finance were key to organisational competence, sustainability, effectiveness and acceptability by the stakeholders. In a statement by Dave Emelike, Public Relations Officer of the firm, she told the participants that the purpose of the workshop was to enable them tackle financial problems by making

constructive, cost-effective and strategic financial decisions that would impact positively on their organization in particular and the public in general. For purposes of achieving the above objectives according to her, the course programme was arranged in modular form of six as follows: sources and Utilization of Funds, Financial Control in the Public Sector, Financial authorities and their responsibilities in the public sector, Budgeting and Budgetary control, Due process and its implication on Public Financial Management and Designing Effective Internal Control System in Public Sector.

Vanguard, MONDAY, JANUARY 7, 2013 — 21

Banking & Finance

"CBN’s policies enhanced microeconomic stability in 2012" will be converted to coins. The new notes would have carried the images of three women, Margaret Ekpo, Funmilayo Kuti and Hajiya Gambo Sawaba.

BY PETER EGWUATU

The CBN’s cashless initiatives The first major policy in the year under review was the Cashless Lagos, the pilot project of the Cashless policy enunciated by the Bankers’ Committee and CBN. The policy was aimed at moving away from cash-based economy to electronic payment system. Its other objectives include addressing currency management challenges in the country, as well as enhancing the national payments system. This is against the backdrop of the direct cost of cash management to the banking industry which was estimated at N192 billion by the end of 2012. The policy stipulates that to withdraw more than N500,000 (for individual account holders) and more than

AMCON Performance AMCON during the course of the year reported a loss after tax of N2.37trillion three years after it was set up to absorb the bad loans of banks. It affirmed that the three banks it acquired which include Mainstreet , Keystone and Enterprise banks would be sold in the second quarter of 2014. Also early in the year, Jaiz Bank the first fully licensed non-interest bank in the country started business. The other industry regulator, Nigerian Deposit Insurance Corporation (NDIC) in collaboration with the apex bank embarked on series of joint examination of the banks with a view to ensuring that banks keep to corporate governance and ethics.

Lamido Sanusi

he macroeconomic stability achieved in the year 2012 was largely attributable to the monetary policies of the Central Bank of Nigeria (CBN) and the collaboration of the Financial Services Regulatory Coordinating Committee (FSRCC) toward implementing various reforms initiatives to boosting the financial industry. Analysts believe that the three key economic indicators: exchange rate, interest rate and inflation and money supply were managed and regulated for meaningful impact on the overall economy. Specifically, the banking industry witnessed unprecedented activities during the year under review. The activities were anchored on the reform agenda introduced in the sector in 2004 by the apex bank and was later streamlined into four pillars by the incumbent governor, Lamido Sanusi. The four pillars centred on enhancing quality of banks; establishing financial stability; enabling healthy financial sector evolution and ensuring that the financial sector contributes to the real economy. The banking sector was expected to effectively play its actual role in intermediation and for the banks to be among global players in the international financial markets. The policy thrust at inception, was to grow the banks and position them to play pivotal roles in driving development across the sectors of the economy. The reform is also targeted at making the system more effective and strengthening its growth potentials.

Inflation and interest rates are set to fall; the banks have substantial lending capacity; the CBN has a proven formula to hold the naira exchange rate provided that the oil price obliges; and mobile money could take off

N3,000,000 (for corporate account holders), there will be a transaction cost. To ensure the success of the policy, the apex bank and banks embarked on promoting the various epayment channels such as the Automated Teller Machines (ATMs); Point of Sales (PoS) terminals, mobile banking technology and internet banking, among others. Analysts believe significant achievements are being recorded in this regard as many Nigerians have now embraced the e-payment channels to transact business. Financial inclusion initiates orth mentioning is the financial inclusion strategy of the CBN. The unbanked and the under-banked are now being attracted to the banking landscape. The licensing of seven mobile money operators in September is further assisting in this regard. The Bankers’ Committee did pick Borno State to pilot financial inclusion. The idea is to

ensure that as many Nigerians as possible have access to financial resources..

Currency Restructuring The CBN during the year under review initiated move to restructure the currency in its programme tagged Project “CURE” which would have seen the introduction of higher denomination of N5, 000. It was met with stiff opposition from all strata of the society as many claimed it would result to inflation. Also, many people talked about the cost implication, stressing that the money it would cost the nation to restructure the currency was too large and could be used for other meaningful things that will transform the life of the citizens. It took President Goodluck Jonathan‘s intervention to put the project on hold and douse the attendant tension. According to Lamido, under the new structure, the existing denomination of N50, N100, and N200, N500 and N1000 will be redesigned with new security features, the lower notes of N5, N10 and N20

Analysts /Stakeholders Opinion he analysts from FBN Capital have stated that there are compelling reasons to expect Nigeria to take some large steps forward. According to them, inflation and interest rates are set to fall; the banks have substantial lending capacity; the CBN has a proven formula to hold the naira exchange rate provided that the oil price obliges; and mobile money could take off. We would add that we are mid-term in the electoral cycle, and that by 2014 the reform programme will be vulnerable to the distraction of the polls the following year. That distraction will be the greater for the uncertainty surrounding the president’s own electoral intentions. The National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir, Sunny Nwosu, the CBN does not exist. According to him, the policies of the apex bank are suffocating the industry ’s stakeholders, stressing that Nigerians should expect worse coming year. n his submission, Chief Executive Officer, Biodun Adedipe Consult, of Dr. Biodun Adedipe, affirmed there is a natural tendency for people to resist change, particularly where they have perceived misgivings about either the process or the driver of the change, which they considered a threat to their vested interests. Adedipe said the industry was moving in the right direction.

BRIEF IMF’s economist:

Budget cuts may hurt growth less now

elt-tightening in advanced economies may not be as harmful to growth now as it was during the height of the financial crisis, but governments should still be careful about drastic cuts, an International Monetary Fund research paper said on Thursday. The IMF came under heavy criticism in October when it conceded that the austerity programs it recommended during the global economic crisis were more costly than expected, causing economic damage that was as much as triple the amount forecast. In a follow-up paper by the IMF’s chief economist, Olivier Blanchard, and his colleague, Daniel Leigh, stood by their initial conclusions but said the harshest impact of those programs may be fading as economies start to recover. The paper in October fueled critics of steep budget cuts in debt-burdened European economies, and prompted the IMF to soften its own recommendations for austerity in the euro zone crisis. It said that now it believed forcing Greece and other debt-burdened countries to reduce their deficits too quickly would be counterproductive. “For example, in Portugal, we have relaxed fiscal deficit targets,” said Blanchard, the IMF chief economist. But Germany said at the time that back-tracking on debt-reduction goals would only hurt market confidence. Some economists also questioned the methodology the IMF had used in its initial research, saying the findings may have been exaggerated, or only applied to certain countries or times. In the follow-up paper on Thursday, Blanchard and Leight said their research held-up for most advanced economies during the height of the financial crisis in 200910. While their views do not represent those of the Fund, the chief economist has a heavy hand in shaping the IMF’s economic thinking.

22 — Vanguard, MONDAY, JANUARY 7, 2013

Coporate Finance he capital market seems to have transited from the apprehensive mood which prevailed among operators at the beginning of 2012, to consensus optimism of a better performance in 2013. This is reflected in the views of four major stakeholders who spoke to Financial Vanguard on the performance of the market in 2012 and expectations for the New Year, BABAJIDE KOMOLAFE writes In January 2012, operators were weighed down by the dismal performance of the stock market in 2011, with further decline of 17.7 per cent in market capitalisation and 16.77 per cent decline in the All Share Index. They were apprehensive about 2012, what manner of year was it going to be. The question on the mind of all operators was: Will the market recover in 2012? The market however performed better and stronger than anybody in the market could have wished for. The market capitalisation rose by 37.4 per cent to N8.974 trillion while the All Share Index (ASI) also rose by 35.4 per cent to 28,079. This was a big relief for market participants, and this is reflected in their summation for the year. “The Stock market stabilised in 2012 and has started to grow again”, said Victor Ogiemwonyin, Managing Director/Chief Executive, Partnership Investment Company. For Bismarck Rewane, Managing Director/Chief Executive of Financial Derivatives Company, the stock market made “Astounding return in 2012.” “Year 2012 was part of the journey to recovery ”, said Emeka Madubike, President Association of Stockbroking and Issuing Houses (ASHON) of Nigeria. Shareholders do not seem to be generous in their praise of the performance of the market in 2012. According to Sir Sunny Nwosu, National Coordinator, Independent Shareholders of Nigeria (ISAN) “The stock market is trying to find its footing after years of experiment”. To him the impressive performance of the market in 2012 was forced. “It is a forced growth because the authorities have been a little bit jittery because they have been talking about developing the market and developing the market and nothing was moving.” Operators in the market however insist that the growth was not forced. “Markets change daily as it reads the economic treads and what adjustments to make”, said Ogiemwonyin, adding that,

Capital Market in 2013:

Transition from Apprehension to Optimism

•NSE trading floor “What we mean by growth is when the volumes and value traded are high. How do you induce growth? By putting money in the market and buying stocks?” Madubike also pointed to the performance of the

of the companies in the NSE 30 Index performed relatively well despite the pressures in the economy ”, he said, adding that even companies that were having problems like the banks had gotten over the problems and they now

The Global economy will have some impact. Whether going up or coming down. But we will experience a more stable growth in the banking sector that appears to be completely out of the woods. The Banking sector will likely lead the other consumer facing companies to stable growth in the New Year.

companies on the Exchange to dismiss the allegation that the performance of the market was induced. “ Most

have better management and technical support. When these factors are considered, you can’t say that the performance

of the market was induced. No dominating Factor Though there were several efforts and initiatives to prop up the market, it may be indeed difficult to affirm that the performance of the market was induced by these factors. Investigations show that the until the third quarter when companies started posting their half year results, which for most were positive, especially the banks, which accounted for about 31 per cent of the market capitalization, the performance of the stock market was neither here nor there. For example between January and June, the ASI only grew by 869 points or 4.1 per cent. But between July 1 st and December 31 st the Index rose by 6480 points or 30 percent. Similarly, the market capitalization

between January and June rose by N362 billion or 5.5 per cent, but grew by n2 trillion or 23.1 per cent between July and December. According to Rewane, it the impressive performance of the market in the second half of the year, was spurred by the influx of half year results posted by listed companies. Yet, even if the market performance during the year was induced, it was difficult to attribute the performance to any of the policy measures introduced by the regulators. According to Madubike, there was no single factor that really influenced the market. “There were lots of initiatives but not one of them could have turn around the market, as what was needed was a multipronged arrangement. The only thing was that there were lots of collaboration between regulators and operators, and this really helped the market, and enhanced the quality of policies introduced to move the market forward. On his part Ogiemwonyin observed that the impact of the various reform measures introduced during in 2012 especially the N22.4 billion forbearance package for 84 stockbrokers, would most be reflected on future growth of the market. In other, words it still too early to assess their impact on the performance of the market. No Market Making Magic Some shareholders however believe that the performance of the market was induced by the introduction of Market Making and the activities of Ten Market Makers. But both Nwosu and Rewane opined that the contribution of this phenomenon to the 35 per cent growth of the market was not significant. “The introduction of market markers is yet to change anything”, Rewane said, adding that “ without adequate liquidity injection, the market makers will make no difference.” Nwosu also stated, “Well, the market makers actually influence the market in the sense that they were made to be mopping up stocks. That actually helped to reduce the glut in the market. But of course, it did not do the magic expected of the market because they too are going through a lot of stress now because by the time you mop up the market to sustain the price growth and nobody is buying the shares, then you will fall into a bigger trouble of managing debt and the volume of shares in your hands. And this is manifested

Continues on page 23

Vanguard, MONDAY, JANUARY 7, 2013 — 23

Corporate Finance

Transition from Apprehension to Optimism Continues from page 22 in the movement of the shares – today it moves 8 per cent and tomorrow it drops 9 per cent and so on. And before you know it, the prices of the stocks so influenced by the market makers would have gone back to what they were before. The fact again is that the market makers are accumulating a lot of financial stress.” To make the Market Makers work, Rewane recommended the establishment of a special Fund, with government contributing 60 per cent and Market Makers contributing 40 per cent. Proceeds from the Fund, he said, should be used to continuously trade in the market and this will boost confidence and stabilize the market. Despite the various views on Shared Optimism the performance of the stock market in 2012, there is a consensus of optimism about the market in 2013. Most operators and shareholders believe that the impressive performance of the 2012 would be sustained this year. “Outlook for 2013 is very positive by most analysts. I also concur to that; I think the momentum that ended 2012 will carry into the New Year. I expect the market to do better than average in the New Year, Ogiemwonyin said. “We believe that 2013 is the beginning of recovery. The recovery will not be broad based; only companies with good fundamentals will gain from their recovery”, Rewane affirmed. Nwosu was generous in outlook for the year. He said, “For me, the capital market is the best option of investment any day, any time because we are leaving leap year, and according to historians. They say the leap year is often a reap year. But we are entering into a normal circle year. And their prediction is that the year 2013 will be better than 2012. I also believe that as we move, we will continue to have a better economic environment. And if that happens, there will be more money for people to invest in the capital market,” Madubike said that the stock market in 2013 should benefit significantly from the various on-going initiatives the federal government to transform the economy, especially the power sector reforms. He and Nwosu pointed out that the early passage of this year ’s budget is a pointer to improved and economic activities during the year, which they believe will translate to increased activity on the Exchange and hence better performance.

namely: Corporate profits, Inflation, Exchange Rate, Economic activities as measured by the Gross Domestic Product (GDP), Stock Valuations, Mergers and Acquisition, Fiscal Policy, United States Dollar and Global Economy. Ogiemwonyin on his part said, “The factors that will influence things include the rising confidence and the liquidity that will follow, especially with the year starting with an approved budget. The gradual return of investors will see the market rise in the first quarter and slowly correct any spike that may be too far from the average. The Global economy will have some impact. Whether going up or coming down. But we will experience a more stable growth in the banking sector that appears to be completely out of the woods. The Banking sector will likely lead the other consumer facing companies to stable growth in the New Year.

Factors to watch On major factors that will influence the market in 2013, Rewane listed nine factors

Cloud of Concern Behind the optimism however is a cloud of concerns about developments

•Bismarck Rewane

•Arunma Oteh, SEC DG

that may impact the market negatively in 2013. Chief among this is the dominance of International investors, who now accounts for 70 per cent of activities in the stock market. This makes the market vulnerable to development in the global market, especially in the light of the Euro debt crisis and the Fiscal cliff in the United States. But stock Sir Sunny Nwosu

market operators hope that there would be increased participation by local investors in 2013, such that the impact of major pull-out of foreign investors would be minimal. According to Madubike, the regulators and operators are aware of this vulnerability and the idea is to focus on what can be controlled hence the efforts to boost increased participation of local investors. He said

this was the rationale for the investor education, and investor protection schemes being introduced, and also the moves to decentralize the complaint management system of the market. Expressing confidence in the effectiveness of these efforts, Ogiemwonyin affirmed, “I believe that even if there was a dip in the market as a result of foreign portfolio investors adjusting their holdings, there will be no panic exit and returning local investors will take up the slack. This is why I think that we will do better than average in the New Year.” Nwosu however said the way regulators and operators treat local investors does not show that they recognise their importance to the growth of the market. He said “There is an adage which we will continue to respect. They say charity begins at home. If you respect a foreign investor at the detriment of your local investor, the day they (local investors) strike, the foreign investors will regret ever coming into this country. So, you need to give respect to your own retail investors. They are the people to protect your stock exchange. The foreign investors are here to make money and get away”.

2012: Reforms, Recovery amidst legislative/regulatory imbroglio By NKIRUKA NNOROM

he capital market witnessed sustained rally in 2012 following measures put in place by the regulators to facilitate the rebound. Besides the battle between the Securities and Exchange Commission’s Director General, Arunma Oteh, and the National Assembly that continued into the new, all efforts were geared towards ensuring that the Nigerian Stock Exchnage, NSE, returned to path of profitability through various initiatives adopted by the NSE management to increase robustness of the market. Following the public hearing into the near collapse of the market organised by the Senate Committee on Capital Market, which threw up the disharmony in the Commission, the board of SEC and other top functionaries were dismissed. A new board was, however, constituted last month. The SEC DG was

asked to step aside to allow for unfettered investigation into the alleged misappropriation of Project 50 funds. Her recall by the federal government despite recommendation of the joint National Assembly that she should be sacked later culminated to refusal of NASS to pass the budget of the commission. Some NSE’ initiatives Chiefly among the changes that swept through the stock exchange within the year was the reconstitution of the Council members, while the eight men co-opted by the SEC DG were ousted. After a two-year legal battle over the moral implication of his position as the president of council of NSE, Alhaji Aliko Dangote returned as the President. A Market Segmentation exercise was completed to rebrand the stock market and boards, and align industry sectors under which

companies are listed, which brought the sectors down to 12 from 33. To address market depth, The NSE introduced a series of new products - the SIM Capital Alliance Value Fund, the ABSA NewGold ETF and the NSE-Lotus Islamic Index. They provide investors the opportunity to gain exposure to gold, a concentrated portfolio of value stocks, and to Shari’ah-compliant companies. Within the year, the NSE announced the appointment of ten market makers to conduct market making activities. This was launched concurrently with Securities Lending and Short Selling. The NSE revised its listing rules and effectively brought down the listing fees, realigned free float for quoted companies and other minimum requirements for new listings in a bid to attract more companies. It also deployed systematic sectorboard- product-specific

1.44

1.29 5.52 0.92 5.81 42.00

33.00 10.07

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

28.00 46.50

9.05 0.64 0.57 4.80 10.62 2.29 0.50 15.05 3.37 23.35 1.07 0.70 1.15 4.12 0.88 7.30 1.55 4.52 7.36 0.50 0.50 18.63

0.59 0.75 0.50 0.50 0.50 1.27 0.50 0.50 0.50 1.55 0.50 0.61 0.50 0.50 0.50 0.50 0.50 0.50 0.56 0.50 0.50 0.51 0.50 0.50 0.50 0.50 0.50 0.50

0.50 0.50

0.50 2.02 0.50

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

0.50 2.02 0.50

0.50 0.50

0.72 0.77 0.50 0.50 0.50 1.44 0.50 0.54 0.50 1.60 0.50 0.61 0.50 0.50 0.50 0.50 0.50 0.50 0.61 0.50 0.50 0.52 0.50 0.50 0.50 0.50 0.50 0.50

9.45 0.64 0.55 5.42 11.14 2.72 0.50 15.08 4.70 25.15 1.07 0.70 1.15 5.15 0.88 7.30 1.98 4.41 7.50 0.50 0.52 19.79

27.56 47.15

10.03 34.39 3.85 2.88

0.50

10.03 34.39 3.79 2.88

Household Durables Beta Glass Co Plc Nigerian Enamelware Plc Vitafoam Nig. Plc Vono Products Plc

29.00 701.00

0.50

29.00 700.06

Food Products-- Diversified Cadbury Nigeria Plc Nestle Nigeria Plc

8.23 6.60 65.00 2.15 8.00 0.83

4.70

8.00 6.00 65.00 2.05 7.14 0.73

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

42.00

3.80 273.00 16.50 149.06 0.89

0.50

100.00

11.80

33.48 10.07

1.41 5.42 1.08 5.81 42.00

1.46

0.50 44.62 20.72

0.50

Closing Price (N)

5.19

42.00

Beverages-Non-Alcoholic 7-UP Bottling Company Plc

HEALTHCARE Medical Supplies Morison Industries Plc Healthcare Providers Union Diagnostics & Clinicals Services

0.50

3.80 261.00 15.90 144.30 0.89

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

11.00

0.50 38.00 16.60

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 Prod ucts Capital Oil Plc

Company

Opening Price (N)

Capital Market

5,000

3,011

22,000 2,000 206,406

54,000 1000

8,025,584 368,000 12,500,000 200,000 200 1,915,311 100,000 62,500 2,000,000 1,698,475 270,000 1,172,778 3,181.666 1,670,890 27,809 100 2,030,000 120,100 13,317,800 31,100 188,070 1,529,355 100 30,100 1,100 100 2,000 29,000

7,107,828 646,608 13,287,533 20,542,250 1,466,261 31,838,912 1,000 16,944,327 25,058,296 16,454,091 56,000 73,200 91,000 2,808,080 1,006,032 173,300 14,940,819 16,299,769 2,353,076 1,246,653 4,284,851 41,912,853

114,252 174,043

225 320 1,092,852 100

209,976 42,239

228,281 2,777,960 66,191 1,511,400 387,250 322,144

7,530

50,000 139,377 422,850 317,905 1,000

100

2,000,000

14,693

69,318 2,733

166,982 264 30,702,332 100 101,732

149,900

70,000 60,440 2,927,600

100

Quantity Traded

0.50

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

51.49

255.00 7.10 100.00 1.01

4.63

0.50

100.00

20.15

62.26 8.28

2.54 8.28 1.82 7.60 42.50

0.66

0.50 24.58 8.30

0.50

Year High

0.50

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

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

0.50

Year Low

0.00

0.00 0.00 0.13

0.02 0.00

0.05 5.85 0.00 25.00 0.00 0.22 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.02 0.00 0.01 0.03 0.10 0.37 0.14 0.02 0.06 0.04 0.10 0.00 0.00 0.00 0.00

1.42 0.00 0.00 0.90 2.81 0.43 0.00 2.03 0.00 2.10 0.00 0.18 0.00 0.71 0.47 0.47 0.54 0.67 0.00 0.00 1.34 2.09

0.70 1.44

3.90 1.61 0.54 0.00

1.35 25.43

0.00 0.91 4.09 0.39 1.01 1.13

2.69

9.95 0.41 5.08 0.00

0.00

11.75

1.69

4.11 4.73

0.16 0.35 0.24 0.26 6.89

0.11

0.10 7.33 2.75

0.09

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 1.39 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

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

14.40 2.41

IT Services NCR (Nig) Plc Tripple Gee and Company Plc

0.50

Processing Sysetms Chams Nigeria Plc

0.56 12.45 20.50 0.50 20.50 1.81 7.75 109.25 26.32 120.57

OIL AND GAS Energy Equipment and Services Japaul Oil & Maritime Service Intergrated Oil and Gas Services Oando Plc 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

0.50

4.90 3.70 5.30

Speciality Interlinked Technologies Plc Transport-Related Services Airline Services and Logistics Plc Nigerian Aviation Handling Company

0.50

1.62 1.92 4.20 4.19 Road Transportation Associated Bus Company Plc

0.50 Printing & Publishing. Academy Press Plc Learn Africa Plc Longman Nigeria Plc University Press

6.50 0.80

0.50

3.00

1.97 1.34

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

SERVICES

0.50

3.98 10.50 13.28 4.30 1.05 2.92 0.66

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

Hospitality Tantalisers Plc

1.44 0.50

Mortgage Carriers, Brokers and Se Abbey Building Society Plc Union Homes Savings and Loans

1.52 0.50

1.38

Paper/Forest Products Thomas Wyatt Nig. Plc

Electronic and Electrical Products Cutix Plc Nigerian Wire & Cable Plc

0.50

10.55

Non-Metalic Mineral Mining Multiverse Plc

5.96

Metals Aluminium Extrusion Ind Plc

7.85

1.99 2.31

17.99 8.56 28.00 5.30 122.00 0.50 3.11 58.05 3.71 1.89 10.93

NATURAL RESOURCES Chemicals BOC Gases Plc

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

ICT Telecommunications Starcomms Plc

0.50

Computers and Peripherals Omatek Ventures Plc

5.05 1.20 1.05 45.10 1.55 0.92 8.17 2.73

ICT Computer Based Systems108 Courteville Investment Plc

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

Opening Price N

3.40 5.39

4.90

0.50

1.62 1.92 4.20 4.50

0.50

6.27 0.91

0.50

3.00

1.97 1.55

0.50

20.50 0.50 20.50 2.88 8.11 109.25 23.76 120.57

12.41

0.60

3.98 10.50 12.98 4.30 1.05 2.78 0.66

1.44 0.50

1.46 0.58

0.50

1.38

0.50

10.55

6.25

7.85

1.99 2.40

18.39 8.56 28.00 5.61 125.00 0.50 1.55 55.00 4.10 1.89 10.93

0.50

15.08 2.41

0.50

5.05 0.87 1.09 45.10 1.70 0.95 8.17 2.47

Closing Price N

235,500 261,850

100,000

4,800 3,317 4,322 10,000

5,000

100 568,500

10,000

12,300

240 232,643

15,594,379

82,191 2,000 30,527 111,317 56,661 18,641 17,996 74,076

2,170,125

2,863,876

6,888 67,559 11,087 29,198 200 84,311 2,749,340

2,000 1,000

15,000 15,000

16,787,800

1,000

100

52,500

390 1,687,966

462,283 3,000 15,137 483,166 91,780 10,374 211,264 1,263,213 460,420 8,000 1,000

2,307,692

7,200 200

1,100

5,002,000

1,000 100 297,080 44,299 165,150 91,000 29,000 50,100

Quantity Traded

Stock Market Report

2.78 11.75

5.15

1.57 6.50

4.90

0.50

4.60 3.60 0.80

3.17

3.68

0.48

3.00 1.33

0.90

2.65

1.97 1.30

8.00 6.82

0.50

400 2.07

1.64

3.67

4.33 3.65

0.72

0.51

141.00 63.86 195.50

163.50 2,100 240.00 539,000

0.50 0.50 5.71 3.89

27.99

0.87

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

5.31 0.70 0.83 2.58 3.61 0.95 0.95 4.28

Year Low

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

Year High

0.60 12.53

0.00

0.25 0.30 0.00 0.54

0.00

0.34 0.92

0.04

0.60

0.00 0.21

0.00

0.01

6.11 2.98 14.63

4.93 0.00 4.25 0.61

1.73

0.19

0.00 3.90 0.90 1.22 0.30 0.07 0.00

0.03 0.00

0.11 0.00

0.00

0.01

0.13

0.78

0.00

0.5 0.25

2.14 1.09 2.28 1.47 7.56 0.00 0.00 4.10 0.44 0.23 0.00

0.00

0.00 0.01

0.00

0.10

0.19 0.44 2.62 0.20 0.09 0.00 0.00

E.P.S

4.22 8.75

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

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

P.E Ratio

as at Friday, January 4, 2012

24 â&#x20AC;&#x201D; Vanguard, MONDAY, JANUARY 7, 2013

Vanguard, MONDAY, JANUARY 7, 2013 — 25

Maritime Review By GODFREY BIVBERE Operators in the maritime industry have e x p r e s s e d disappointment with the level of development in the industry in 2012 and therefore called on the federal government to pay more attention to the industry in the new year. They were of the opinion that an effectively managed and operated industry has the capacity to

Operators’ projection for maritime industry in 2013 further boost the nation’s economy, as well as create the much needed jobs for the army of unemployed youths in the country. National President of National Association of Government Approved Freight Forwarders (NAGAFF), Eugene Nweke, told Vanguard

that government seems not to be interested in exploitation of the potentials of the sector. Nweke who noted that Nigeria as a country can not afford to continue the way it has been going over the years, called on government to commence the process

of revamping the industry. According to him, the first step “is for government to beginning to make the right pronouncement, policies that will drive the development of the sector because of the important role of maritime to the nation’s

economy.” He noted that government must work at ensuring that the nation’s ports are more functional and are operated in line with the international best practices. He also stressed the need for government to ensure that local content aspect of all operations in the maritime sector as applied as it is obtainable in the oil and gas industry. The National President of NAGAFF pointed out that there is need for government to ensure that Nigerians are helped and encouraged to acquired vessels. Nweke also said there is need for government to work at seeing the steel mills in the country begin production again as a means of encouraging the ship building capacity of the nation. He noted that production of steel and building of ships will benefit the economy as well as help reduce the unemployment level in the country. He disclosed that for ship building, the shipyards can start with small vessels and develop with time, instead of remaining dumping ground for technologies around the world. Similarly, former President of the Association Association of Master Mariners of Nigeria (AMMN), Capt. Niyi Adeyemo, said last year there was nothing substantial in the industry. Adeyemo noted that most of the things that occurred were flukes, force hopes, things that operators expected government to do which were not done. He pointed out that the issue of ship acquisition has remained a big concern to operators and that government continues to pay lip service to it. He complained about government’s unending promise about the Cabotage Vessel Finance Fund (CVFF) for which promises for its distribution have been made severally and such promises have not been kept. Adeyemo also

complained about continued domination of the carriage of the nation’s crude by foreign operators and promises that have been made in the past. He pointed out that several meetings have been held between the Nigerian National Petroleum Corporation (NNPC) and the body of indigenous operators under the aegis of Indigenous Ship owners Association of Nigeria (ISAN), where assurances for slot were given to them and based on which they made huge investment. The former AMMN President said based of NNPC’s slot assurance, they had gotten technical partners and acquired huge vessels in readiness for their participation but NNPC did not go beyond the promise it. He however commended the management of the Nigerian Maritime Administration and Safety Agency (NIMASA) for its capacity development efforts, which he attributed to the appointment of some professionals as part of the team. He expressed the hope that government will be alive to its responsibilities for the sector in the new year. Asked what responsibilities he is referring to, Adeyemo noted that the Minister of Transport, Senator Idris Abubakar, who seems to be focusing on the waterways and railway systems, must as a matter of priority start paying the same level of attention, if not more, to the maritime industry. He called on government to ensure that indigenous operators get their own vessels through the disbursement of the CVFF. He also noted that there is need for government to ensure that indigenous operators are included in the lifting of the nation’s crude. He also charged his colleagues to put their house in order to ensure that they met the expected level for them to be taking seriously. C M Y K

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Interview

Tell us why you’ve decided to sustain this bi-annual seminar for journalists? Given our mandates as a ministry, it is pertinent that there is need to support and partner with the media in order to achieve our targets. This is in view of the fact that when you consider the number of media that are available and the continued demand for more by the people. A recent survey by the Nigeria Communications Commission, NCC, indicated that Nigeria now has over nine million active mobile subscribers. As a result, people now have the latest information at their fingertips. These people could be local or foreign investors and they could be Nigerians or Foreign nationals. As you are aware, the world is a global village and there is no country that is exempted from the flow of information. Because of the mandate of the ministry, we are identifying with the media because of the crucial roles of the flow of information dissemination, ideas, agenda setting and discussions, given the transformation agenda that has been set by the federal government. Although both local and international investors rely heavily on data to make an informed trading and investment decision, in doing this, they look at countries where there is free media. It is on this note that we deemed it necessary to grow and to strengthen this relationship between the ministry and the media. It is the right thing to do for the development of this sector and for our country.

What we need is brains and training, so that people can formulate the right policies and programmes to attract investments into the economy, to boost industrialisation, to boost trade and develop enterprises

secretaries. Those assets have to be guided properly so that they can make a difference in the country. When you look at the ministry closely, we are the interface between the government and the private sector. It’s important that the private sector is fully aware of what the government is doing and what the government wants the private sector to do and the only way they can be fully aware is if the press is fully used What are the main mandates of the ministry? As regards the mandate of the ministry, today, it is to promote economic growth, create jobs, and how do we do that? We do this by formulating and implementing policies. That is why I said earlier what we need is people; what we need is brains and training, so that people can formulate the right

ith 16 parastatals under your ministry, how will you describe the people working with you? This is a ministry that doesn’t do contract. We don’t have money; what we have is people; people with intellect, people that are exposed because most of their jobs are for policy making and interacting with the private sector. They are creative and innovative people; they don’t wait for government financing before they do what they are supposed to do. So, our asset is our people. Our assets are our leaders - the director generals of each of these parastatals, Chief executive officers and executive

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We will work with SA to d automotive policy for Nige policies and programmes to attract investments into the economy, to boost industrialisation, to boost trade and develop enterprises. So, what we need in the ministry is quality and capable hands that can deliver our mandates. In summary, our mandates are in four broad areas: to create an enabling environment to stimulate domestic and international investment into all sectors of the economy; to encourage domestic, regional and international trade. It’s about industrialisation, fostering the micro, small and medium enterprises, and making sure that businesses grow and are adding values to our economic growth and development while creating jobs. I have always been a believer that for an organisation or even any individual to succeed, it is important that it is based on solid values. Companies that do well have strong culture and values, and what should the values of the ministry be? They all agree that integrity and team work are important. I can’t overemphasize the importance of team work because there is a reason why this ministry is supervising 16 parastatals. The idea is that if they work together as a team, they will do a better job, instead of working as separate departments. The idea is to encourage team work and to help one another do better as against what they suppose to do. S e rvice delivery, transparency and discipline are important. If you look at

Olusegun Aganga...I have always been a believer that for an org it is important that it is based on solid values

ecently, the Ministry of Trade and Investment organised a two-day workshop for journalists covering the sector where the Minister, Olusegun Aganga, spoke on the ministry’s achievements in the last one year and some of its plans for 2013 and beyond. He specifically said that he intends to develop the automotive industry to reflect the success story recorded by South Africa in that area. BABAJIDE KOMOLAFE, FRANKLIN ALLI & NKIRUKA NNOROM were there and captured the interview for Vanguard

The Ministry of Trade and Investment has made significant achievements within the last one year. In terms of investment inflow, in spite of insecurity, we attracted about $8.9 billion new investments into the country

the mandates of the old Ministry of Commerce and the new Ministry of Trade and Investment, there is a difference. The Manufacturers Association of Nigeria had argued over the new name since last year, and the argument was that the name of the ministry should actually be changed to the Ministry of Industry, Trade and Investment. Industry is parts of the mandates of the ministry. We recognise the need for industry because if the country is to grow, it needs to industrialise. It is very similar to other countries. In Japan for example, it is called the Ministry of Economy, Trade and Industry. I just came back from Finland and Sweden. In Sweden it is

called the Ministry of Economy and it combines trade and industry. In Germany, it is called the Ministry of Economy and Technology, and what they do is technology and SMEs development and trade. In UK, it is called BIS, Business Innovation and Skills, and what they do is enterprises development. In Russia, it is called the Ministry of Industry and Trade, while in Korea, it is called the Ministry of Knowledge Economy. If you ask the common man on the street about the economy, he will either tell you the economy is doing well or not. Economy is about job creation, SMEs development, it’s about trade investments and industries. Really, when you do that, you are opening up all activities around the economy. Agriculture, for instance, produces raw materials for industries; as well as mines produce

Vanguard, MONDAY, JANUARY 7, 2013 — 29

Interview

develop sustainable eria — Aganga

hat is the current status o f the textile sector? The industrial capacity utilisation which is what we use to measure whether our industries are doing well has increased from 29.1 percent in 2010 to 52 percent in 2011.

What are some new policies that will shape the industrial sector in the New Year? Well, to start with, the Federal Government is going to ban the importation of raw sugar with effect from January. The ban is in line with the implementation of the National Sugar Master Plan. Currently, there are two major investors in sugar industry which are Dangote Sugar Refinery and Bua Sugar Refinery. The objectives of the National

Only investors who are committed to backward integration in the sugar sector will be given licenses to import certain quotas into the country in order to augment local production

world, and as of today, we are told that 50 percent of the investment coming into Africa is coming into Nigeria. When you look at it, 30 percent of the investment comes into the real sector of the economy. In fact, since 1999 to 2011, we have been having a high rate of investments into the country. From 2005 to 2008 it was high but it came down, but since 2009, it had continued to be higher because the investment climate has continued to be better. Also, we were able to attain 24 hours start- tofinish business registration service by the Corporate A f f a i r s Commission, CAC. I actually went to Lagos to open the office they have in ganisation or even any individual to succeed, Ikeja and Yaba. The idea is that people in Lagos don’t have to travel iron-ore which you can sell locally and internationally to iron and steel to Abuja anymore to have their industry- that is manufacturing. The businesses registered. same is petroleum which produces ou talked about crude oil which is sold to petrochemical introducing weights and industries. I don’t know if anyone can explain to me today why over the last measures law in other sectors 50 years, we have been a net exporter of the economy. Can you shed of raw materials but we have not been more light on this? able to add value for 50 years. Why do It is something that has been we sell crude oil that adds value somewhere else? They pay their staff, in the economy for many years, import it and sell it to you and you pay but it was never noticed. It is tax. Clearly, it’s obvious there is mistake called legal metrology. When somewhere. It is because the right you buy something or get a policies were not in place. It’s because service, whatever you get is the economy focuses more on contract. accurate measure.When you go That is why there is a paradigm shift in to the market and you buy rice, this ministry as per what it is supposed if they are selling a module to you, the measurement must be to do. accurate and not false scale. If So what are the achievements of the it is oil, one litre must be one litre; and if PHCN comes to ministry since you took over office? The Ministry of Trade and Investment you and say you used X has made significant achievements amount, it must be accurate. If within the last one year. In terms of the oil and gas for example is investment inflow, in spite of insecurity, taking oil out of the country, we attracted about $8.9 billion new there has to be meter at the investments into the country. That point to make sure they register made Nigeria one of the number one the quantity or volume going investment destinations in Africa. The out and coming in. There has increase in net inflow was about 46 been a lot of leakages because percent which is higher than the West the metering is not working or Africa. We have done far better than the they are not installed. For rest of West Africa and the rest of the GSM, how are you sure that you are paying for the quantity

of calls you are making. It’s for this reason that government deemed it necessary to introduce the law across all sectors of the economy, and we have started with oil /gas, telecom and power sector. Through this measure, we will save nothing less than $3 billion and also generate N17.4 billion per annum.

Garment Revival Fund. It was created and made available to the sector through the Bank of Industry at reasonable interest rate. It has started attracting other investors into the sector. Capacity utilisation in the automobile sector has gone up, too. This is being driven by Innoson Vehicles Manufacturing.

That is a big leap and that tells you that the policies are working and jobs are being created. That tells you that we are increasing our roles in terms of industrial contribution. I went to Kano and Kaduna sometime ago to look at all these industries particularly the textile companies and we have some of them in Lagos, too. The figure I gave is not my number; the number was given to me by the Manufacturers Association of Nigeria. The increment in the capacity utilisation was because of the injection of Federal Government’s N100 billion Cotton, Textile and

Sugar Master Plan include raising local sugar production to attain self sufficiency, stemming the tide of high level importation, creation of huge number of job opportunities, as well as contributing to the production of ethanol and generation of electricity. Currently, 98 percent of brown sugar which are refined into white sugar is imported into the country from Brazil. All these are going to change this year as only investors who are committed to backward integration in the sugar sector will be given licenses to import certain quotas into the country in order to augment local production.

The idea is that we want to replicate the success story of backward integration policy in the cement industry in the sugar industry. We won’t allow the importation of brown sugar again in 2013. The National Sugar Development Council has been mandated to draft high graduated tariff structure on sugar importation, mandatory backward integration programme for refineries, and provision of investors-specific incentives to discourage importation of raw brown sugar and attract investors into the sector. Other strategies to be introduced by the Council will include regulation of the entire regime of sugar importation through quota allocation benchmark on local production, robust monitoring and evaluation framework to ensure compliance with milestones and time-lines and enlargement of the sugarcane value chain players. The ban is expected to attract an estimated $3.1 billion foreign direct investment into the country, deepen banking sector via increased loan syndication, savings of foreign exchange on sugar imports and earnings on sugar exports to be deployed to other critical sector. With backward integration in sugar, 1.8 million tonnes of sugar and 161.2 million litres of ethanol annually would be locally produced per annum. It is also expected to create 37,378 permanent jobs and 79,803 seasonal jobs, save $65.8 million in foreign exchange on fuel imports annually, and $350 to $500 million in foreign exchange on sugar imports annually. In addition to this, we are also coming out with a sustainable policy for the local automotive industry. Out of the ten automobile producing countries in the world, only two does not have automobile plants - Bangladesh and Nigeria. We attempted it in the 70s but things went wrong because we didn’t look at it holistically and from the point of ecosystem. We are going to come up with a sustainable policy for the automobile sector. The policy will come up in the 2014 budget. In Africa, only South Africa has the most successful automobile sector. We are going to work with the people who designed the South African policy so that we can have a sustainable automobile policy for this country. I don’t intend to finish everything before the end of this administration, but we will set the direction for the incoming governments. We are also going to focus on cement, petrochemical industries and Aluminum industries.

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30 — Vanguard, MONDAY, JANUARY 7, 2013

Micro Finance BRIEFS BoZ pegs microfinance Service Providers’ lending rate at 42%

he Bank of Zambia has with immediate effect introduced a cap on the effective annual lending interest rates that licensed non-bank financial institutions can charge their customers. This follows similar recent measures taken on commercial banks by the central bank. Bank of Zambia Head of Public Relations Mr. Kanguya Mayondi in a statement released to media said that this measure has been necessitated on account of the exorbitant interest rates that some non-bank financial institutions have continued to charge their customers. Mayondi explained that the capping of interest rates is aimed at making borrowing from non-bank financial institutions more affordable and equitable especially to the vulnerable micro-borrowers served by this sector.

Microfinance defaulters may find it tough to get fresh loans

defaulter or overleveraged borrower might find it difficult to get credit from microfinance institutions (MFIs). With almost all NBFC-MFIs sharing nearly 100 per cent of the borrowers’ credit history with credit bureaus, borrowers will find it difficult to approach them for loans. Following the crisis in the MFI industry in Andhra Pradesh, the Reserve Bank of India had, in September last year, asked all NBFC-MFIs to upload the data of their clients with any of the four credit bureaus including Cibil, Experian, Equifax and High Mark. According to Alok Prasad, Chief Executive Officer, Microfinance Institutions Network (MFIN), close to 75 million client records have been uploaded with the two credit bureaus — Equifax and High Mark Credit Information Services Ltd. “The first step is where the MFIs provide a data of their clients to credit bureaus; the next step is where they can take reports on specific clients to get their borrowing and repayment record. Both these steps are being followed by MFIs,” Prasad told Business Line. C M Y K

MFBs expect a vibrant sub-sector in 2013, …say next to recapitalization is disbursement of funds Stories by PROVIDENCE OBUH

ollowing the December 31, 2012 deadline given for the recapitalisaion of all Microfinance Banks (MFBs) operating in the country, operators have expressed hopef of a vibrant sub-sector in 2013. Meanwhile the sub-sector has affirmed that subsequent to its recapitalization, it is charting means of disbursing its outstanding funds that have awaited the categorization exercise. The recapitalization is a revised policy framework of the Central Bank of Nigeria (CBN) directing MFBs to increase their capital base to

position them to Unit, State or National category. The Unit category will have a minimum paid-up capital of N20 million, paid-up capital base of N100 million for State category and a paid-up capital of N2 billion capital base for the National category. To this end, the Chairman, National Association of Microfinance Banks (NAMB) South West zone Mr. Olufemi Babajide said that the recapitalisation would enhance efficiency in terms of fund disbursement to farmers and low income earners, especially the active poor in the society. “The sub-sector is expected to start disbursing the

numerous funds approved for on lending by the CBN,” Babajide explained, saying, “The categorization would help know who is who in the sub-sector and also determine the MFBs that qualify in the disbursement of the funds.” It would be recalled that the CBN launched the N220, billion Micro Small and Medium Enterprises Development Fund (MSMEDF) and also set up N600 billion in a special purpose vehicle under the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL) initiative to be assessed by farmers. “Our challenge has always been liquidity but with the

Dangote expands Sugar Refinery to boost local capacity D

angote Sugar Refinery Plc has started expanding its production plants ahead of the Federal Government’s backward integration policy for the sector under the National Sugar Master Plan. It would be recalled that the Federal Government recently declared its intention to ban the importation of raw sugar with effect from January 1, 2013. Dangote is one of the topmost investors in the local sugar industry with its refinery at the Tincan Ports and sugar cane plantation in Nume, Admawa State. Engineer Abdullahi Sule, Managing Director, Dangote Sugar told VANGUARD that the expansion was in tandem with the Federal Government ‘s National Sugar Master Plan whose aims are raising local sugar production to attain self sufficiency, stemming the tide of high level importation, creating huge number of job opportunities, as well as contributing to the production of ethanol and generation of electricity. Currently, 98 percent of brown sugar which are refined into white sugar is imported into the country from Brazil. He said that as part of its company’s alignment with backward integration, its refinery in the country is

being expanded to make it the largest in the world. He also announced that his company would formally take over Savannah Sugar Company, Adamawa state by this year sequel to endorsement of the gesture by the shareholders at the last Annual General Meeting of the company. He said that his company currently controls 70 percent of market share in the

country, just as it met 97percent yields in the outgoing year which he said reflected in the N16 billion profits after tax. He explained that the fire incidence which engulfed part of the company in the middle of the ear did not stop it from meeting and exceeding its projection because the personnel of the sugar company have been able to redouble their efforts and blocked leakages.

Olufemi Babajide funds coming from the CBN, we expect a very vibrant subsector in 2013, and we expect a 10 per cent growth in 2013 because of all the opportunity that will come our way. I see us jumping, leaping, and I think we should be able to increase our reach from the present volume to something significant,” he said. Accordingly, an official of the CBN who spoke to Financial Vanguard on anonymity said that the recapitalization concept has been misunderstood by the public, explaining that 20 million recapitalisation has always been there for all MFBs. The source also said that MFBs who can not meet with N100 million under state categorization remain in the Unit category. “The Unit MFBs can continue, if they do not have N100 million. Even if they have N80 million, they should go ahead to close down their branches or else they will be penalized.”

Special Colloquium on Nigeria’s Image Holds in Lagos

colloquium on g e r i a ’ s Image is to hold in Lagos in commemoration of the 50th birthday anniversary of Mr. Yomi Badejo-Okusanya, the Managing Director of CMC Connect Limited (Perception Managers). Also, Minister of Foreign Affairs, Ambassador Olugbenga Ashiru has been confirmed as Special Guest of Honour at event. The colloquium themed: “Managing Nigeria’s Image: Whose Responsibility?” is scheduled to hold on Tuesday January 8, 2013 in Lagos. A keynote address will be delivered by the Honourable Minister of Information, Mr. Labaran Maku while former Foreign N

Affairs Minister, Major General Ike Nwachukwu (rtd), CFR, will Chair the event. In a statement made available to Vanguard by Acting Head of Media, CMC Connect, Mr. Sola Solotan, the colloquium is part of activities lined up to celebrate Mr. Badejo Okusanya who, in his words “has contributed in no small measure to the growth of Public Relations in Nigeria and the whole of Africa”. Solotan noted that the colloquium will be a convergent point for integrated marketing c o m m u n i c a t i o n s professionals and institutions in Nigeria whose core focus area includes communications and image management. It will explore issues and

factors that shape Nigeria’s image and proffer solutions to such communications challenges. Several captains of industry are part of an impressive faculty of discussants who have been constituted to x-ray the issues being discussed. This includes former Minister of Information, Professor Dora Akunyili, the President of the Newspapers Proprietors Association of Nigeria (NPAN) and Publisher of Thisday Newspapers, Mr. Nduka Obaigbena, the Chairman of Advertising Practitioners Council of Nigeria, APCON and Managing Director of Prima Garnet, Mr. Lolu Akinwunmi and the Managing Director of Guinness, Mr. Seni Adetu.

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Insurance

No premium no cover: Brokers to confront underwriters on rejected businesses Stories by ROSEMARY ONUOHA

ollowing the commencement of the ‘no premium no cover’ directive from the 1 st of January this year, insurance brokers said they are ready to challenge any underwriter that by-passes them to collect businesses originally rejected. Accordingly, the brokers said they will speedily report such underwriter to the National Insurance Commission, NAICOM. President, Nigerian

Council of Registered Insurance Brokers, NCRIB, Mrs. Laide Osijo who disclosed this in Lagos, said that brokers have been enjoined to report underwriters who by-pass them to take a business they rejected, stressing that the operators have all agreed to abide by the policy, which would bring sanity to the industry. She said that NAICOM will soon be meeting with representatives of underwriters and brokers to help resolve the growing mistrust between underwriters and brokers on the

implementation of the policy. It was learnt that brokers are worried that underwriters may by-pass them to provide cover for businesses rejected due to non payment of premium. As such, Osijo said the operators have agreed with NAICOM to call the stakeholders who are representatives of the brokers and underwriters to sit and chart the way forward for the implementation of the policy. She noted that the operators have to agree on the modalities for the implementation of the policy, adding that during the

L-R, Alhaji Aliyu Sa’ad, Chairman, Agnes Umukoro, Company Secretary; Mr. Thomas Imokhai, MD/CEO and Brigadier General Dominic Oneya (rtd) during the Annual General Meeting of Standard Alliance Insurance Plc in Lagos. Photo by Lamidi Bamidele

meeting all challenges that may clog the policy will be ironed. She said, “These issues are fundamental to the operations of brokers, for 80 per cent of insurance business in the country is done through brokers. If we follow the law and underwriters refuse to follow, the whole thing would be a mess. We would try to ensure we get the modalities as to how to go about the policy.” She lauded the decision by NAICOM to bring sanity into the industry through the policy, adding that the idea of underwriters accusing brokers of non remittance of premium will now be a thing of the past with the introduction of the policy. “According to the Commissioner for Insurance, Fola Daniel, when they were doing verification of accounts of brokers and underwriters, they observed that most of the outstanding premium that brokers were accused of was not actually true. Some of the underwriters raised their books to cover their expenses.” “NAICOM observed the mis-representations and sanctioned the errant underwriters. Some brokers who erred by keeping premium beyond the stipulated date were also sanctioned. I am not saying that brokers are perfect, but most of the accusations by underwriters are not really true. NAICOM observed that most of the withheld premiums are receivables,” she said. .

Miss Insurance urges operators to join fight against drug abuse

he 2012 Insurance Queen, Miss Onyeka Adigwe has urged insurance operators to join the enlightenment campaigns against drug abuse and not leave it to government alone. According to Onyeka such enlightenment should not be left to the government alone hence the need for insurance companies to join hands in combating one of the major menaces of our society which is drug abuse. Adigwe gave the charge at the grand finale of her pet project themed “Youth Empowerment: Functional Education and the Dangers of Drug Abuse, held at CMS Grammar School, Bariga, Lagos. In carrying out her pet project, Adigwe visited secondary schools with her team which comprises of officials of

National Drug Law Enforcement Agency (NDLEA), educationists and insurance practitioners. They have held series of interactive sessions with the students on various issues contributing to failure in their academics, dangers of drug abuse as well as benefits of insurance as a profession and a way of life. This, they believed would help to build their immunity against negative influences. Adigwe disclosed that her pet project was instigated by her passion to see students focus more on their education and disallow distraction from peer pressure and social vices depriving them of the opportunity to build a future beneficial to them and the country. According to her, she targeted the secondary

school students because they are more prone to negative influences that can jeopardise their future as well as that of the nation; and also to bring about veritable change among the upcoming leaders of tomorrow. Also, in the course of her project, Miss Insurance engaged the students in an inter-school essay competition titled, “Benefits of Insurance to a Nigerian Child”. This she did in order to entrench the gospel of insurance in them and to serve as a platform of ‘catching them young.’ With this, the students were able to carry out research on insurance and its significance to individuals, families and nations. On the Youth Empowerment Day, students and schoolrepresentatives were

awarded prizes and plaques for their participation in the essay competition. The winner of the essay-writing competition took a HP laptop while his school took a HP desktop computer. The second position took a mini laptop and her school, threein-one scanner and a white board. The third position won a digital camera and a cash of N20,000.00 while his school took a water dispenser. The speakers at the event were Mrs. Modupeola Dallas-Olusanya, Managing Director of Gombot Insurance Brokers Limited; NDLEA officials led by Mrs. Bolanle Adekunle; Mr. Joseph Oba from the Chartered Insurance Institute of Nigeria; and Mr. Tunde Badmus from Regency Alliance Plc.

BRIEF Osijo, Daniel, Mutual Benefits get Inspenonline awards

he Management of Inspenonline, Nigerian’s first Insurance and Pension online media channel, has named the President, Nigerian Council of Registered Insurance Brokers, NCRIB, Mrs. Laide Osijo, the Insurance Man of the Year 2012. According to a statement by Inspenonline, Osijo emerged top, out of many insurance operators considered for the award. Within the short period she has been on the saddle of leadership of the largest insurance brokers fraternity in Africa, she has distinguished herself and has used her wealth of experience to reposition insurance practice. The Commissioner for Insurance Fola Daniel was awarded the Good Leadership Award, for his steps in repositioning the industry and providing adequate security for policy holders. Mutual Benefits was named the Insurance Company of the year. The company was picked due to its stride in retail insurance through well developed micro-insurance channel. For Osijo, coming into the insurance industry about four decades ago was providential. She had desired to become a lawyer, an ambition that was fueled by her innate passion to render succor to the helpless. But as fate would have it, she ended up being an insurance practitioner, through which her name has been etched indelibly on the sands of time. It is most auspicious that her sojourn in the profession has been holistic, having had working stints in all the constituents of the industry, namely underwriting, reinsurance and now, broking. Her journey to becoming the first female president of the NCRIB was anchored on sheer determination, tenacity of purpose and a ‘can do’ spirit. Osijo said, “I made up my mind on my first visit to the NCRIB Secretariat to give anything it would take to be the first female president while I waited to be attended to, my eyes strayed to the photo platform where pictures of all past presidents of the Council were hung. Amazingly, there was no picture of a single female president produced by the Council.”

34 — Vanguard, MONDAY, JANUARY 7, 2013

Housing Finance BRIEF Mortgage funds to rise significantly —BoE

he supply of mortgage funds will be increased “significantly ” by the Funding for Lending Scheme (FLS), says the Bank of England. A survey of lenders by the bank reports that lending picked up in the last three months of 2012, and will continue to do so in the coming months. Separately, the Nationwide building society said that house prices fell by 1 percent in 2012. And it predicted little change in either prices or sales this year. The building society said that the average UK property was valued at £162,262 at the end of 2012, following a 0.1 percent drop in December. The BoE’s Credit Conditions Survey found that the Funding for Lending Scheme, launched at the start of August 2012, was now helping to increase the flow of money to borrowers. The aim of the scheme is to channel as much as £60 billion of cheap money to lenders, on condition that they then lend it to households, and to companies outside the financial sector. An initial report on the scheme, published by the bank in early December, found that lending to households and businesses increased only slightly in the third quarter of the year, as the new scheme got under way. Since then, its effect has grown stronger. In its survey, the bank said: “In the three months to midDecember, lenders reported a significant increase in the amount of credit made available to the secured household and corporate sectors, and a slight increase in the availability of unsecured credit to households. The Funding for Lending Scheme was widely cited as contributing towards the increase in secured and corporate credit availability. Lenders expected a further increase in the availability of credit to all sectors over the coming quarter,” the Bank added. The British Bankers’ Association said: “This encouraging survey provides further evidence the Funding for Lending Scheme is having a positive impact and the participating banks are successfully passing on the benefits through cheaper finance.”

Development of mass housing

Housing deficit: FG set to inject N200bn lifeline — Lemo By YINKA KOLAWOLE

he Federal Government is set to inject N200 billion into the housing sector within the next four years as intervention fund to ensure that more Nigerians have access to decent and affordable housing. Deputy Governor, Operations, Central Bank of

Nigeria (CBN), Mr. Tunde Lemo, said this is necessary against the backdrop of the huge housing deficit in the country estimated to be 16 to 17 million housing units nationwide. He said the disbursement of the fund will be done through the Federal Mortgage Bank of Nigeria (FMBN). Presenting a paper titled, “Towards the development of an efficient mortgage market

in Nigeria: Challenges and opportunities”, at an event recently in Abeokuta, Ogun State capital, Lemo said that the N200 billion will go some way in tackling the housing problem in the country which is estimated to cost about N6 trillion. “One of the opportunities in the housing industry, especially under this present administration is the fact that over the next four years, the

government intends to inject N200 billion (more than $1billion) into the nation’s housing sector through the FMBN. This is meant to provide decent accommodation for Nigerians out of the N6tn required to meet the housing deficit in the country. “This intervention in the housing sector will increase the housing stock and substantially reduce the present deficit in decent homes, which is presently estimated at 16 to 17 million housing units nationwide. The beauty of this is that, hopefully, as the economy improves, the living standards of the workers will increase,” he stated. The CBN top official noted that apart from the need to vigorously pursue a programme of boosting the housing stock in the country, concrete efforts must also be made to develop an efficient mortgage market that would be easily accessible to all Nigerians, especially the low income earners. He added that every necessary step must be taken by all tiers of government to redress the current state of “ near homelessness” by majority of Nigerians. Lemo lamented that despite identifying housing as major priority by most successive Nigerian governments since 1960, this has not led to the development of a vibrant mortgage market in the country. “Periodically, with a huge estimated population of about 160 million people at the end of December 2011, most of whom are young, and a rising demand for housing finance, the Nigerian housing/mortgage sector remains grossly undeveloped.

FMBN approves N165.2m NHF loans for Resort Savings By EBUN SESSOU

ederal Mortgage Bank of Nigeria (FMBN) has approved the disbursement of N165.2 million from the National Housing Fund (NHF) as mortgage loans for customers of Resort Savings and Loans Plc. Managing Director of the bank, Mr. Abimbola Olayinka, noted in a statement that the disbursement is the second in less than five months, after N411million was earlier approved for disbursement in August to the bank. He said the bank is poised to deliver quality service to its customers. According to him, “Resort Savings and Loans is still very committed to timely delivery of houses through its wide range of products which includes the National Housing Fund (NHF) s c h e m e ” . He said those to benefit from

the development include “low and medium income earning individuals, private sector employees, public servants, self employed, businessmen, t r a d e s m e n owning their personal homes in any urban centre of the federation with the property serving as the sole collateral.” Olayinka further stated that the loan repayment is just like

the monthly rent because of its singule digit interest rate of 6 percent per annum with a long tenure of about 30 years depending on the present age of the subscriber. He said the bank is ready to assist individuals and corporate organisations in the remittance of employees’ 2.5 percent of their basic income from organisations who wants

to become contributors to the NHF scheme. He said that the bank has been able to create an atmosphere that makes home ownership more accessible and timely to all Nigerians from the age of 18 years and above, adding that the bank has established a network of branches in strategic locations across the country.

Akinruntan tasks Ondo on reclaimed Ilaje shoreline

n appeal has been made to the Ondo State government to build houses on the reclaimed shoreline of Adagbakuja lagoon in the oilrich Ilaje LGA of the state. Olugbo of Ugboland, Oba Fredrick Akinruntan, who made the appeal, said the government can build not less than 300 housing units on the reclaimed New Town project site, on which the state

government spent N7 billion to reclaim from the lagoon about five years ago. According to the monarch, the site covers a two-kilometre square area adjacent to OdeUgbo, which is the ancestral home and spiritual headquarters of the UgboIlaje and Ugbo-Nla. He said the multi-billion naira project was aimed at creating a new settlement for the Ilaje people,

who are mainly fishermen and live in makeshift settlements near the lagoon. He said his immediate focus was to attract foreign and local investors to develop the shoreline within his domain. “The state government should help us to complete the Adagbakuja project by delivering not less than 300 houses for our people.

Vanguard, MONDAY, JANUARY 7, 2013 — 35

Housing Finance

ouses are the largest “items” many people will ever spend on in their lifetime; the sheer size of the funds spent on them and the proportion of the financial system connected to housing construction and real estate make housing a dominant part of the economy. Getting the policies to stimulate the demand and supply of housing right is one of the most portent ways to develop an economy. The sector provides employment for a host of professionals and perhaps even more importantly lower-skilled artisans; architects, mortgage providers, painters, carpenters, transporters, tillers, interior decorators etc. Affordable Housing: A conceptual trap The “basic needs” nature of housing and the enormous costs involved in procuring them has necessitated public interventions in their provision. In the absence of a mortgage system, personal savings, achieved through significant deprivation and/or engagement in corruption are often required to build or acquire a house. In Nigeria, the principal means of acquiring a property is to buy land and build over an average of 10 years. This is grossly inefficient as funds invested in the land and buildings are usually totally unproductive until the house is completed. Broadly, we can contrast “provider ” and “enabler ” models of intervention. In the former model, a Government directly builds houses or supplies inputs for the procurement of housing while in the former, the Government concentrates on creating incentives to boost the demand and supply of houses by private actors in a context largely governed by freemarket, profit-oriented relationships. Singapore: A stateprovided housing market The strategy employed by Singapore is of more relevance to Nigeria because of the similar levels of development in the postcolonial period. Today, about 85 percent of Singaporeans live in houses developed by a state-owned housing corporation. This feat was achieved with three main institutions: The Housing Development Board (HDB). A state agency founded in 1960, the HDB had the mandate to develop houses for Singaporeans. It first concentrated on developing low-cost houses, mostly high-rise multiapartment buildings which were built after slums were demolished. A British Housing Committee Report had commented in 1947 that Singapore had “one of the world’s worst slums - ‘a

Affordable housing: For all or those who can afford it? with slum eradication and providing low-cost houses for rent. Government through its planning and regulatory powers and also through investment in infrastructure, directly and indirectly vastly multiplies the value of lands. When lands in housing schemes or new towns or neighborhoods, like Lekki in Lagos or Maitama in Abuja, are “allocated” rather than sold to developers through competitive auctions, monumental value is being surrendered. Furthermore, taxes on property built on such land never reflect the enormous value that has been lost and that is if taxes are levied or paid at all. Funds which could be used to develop houses for the poor who often are evicted from the lands are hence lost. It is sad that we are building on these poor policies rather than eradicating them. For instance, under a bizarre PPP scheme, hectares of lands are allocated in Abuja to developers for nominal sums far below the market value, the construction of houses to be financed by the “Estate Development Window” of the Federal Mortgage Bank of Nigeria to build low-cost houses.

Ama Pepple, Minister of Housing disgrace to a civilized community”. The high-rise buildings were rented out to Singaporeans who used to live in the slums. The flats were very modest buildings with toilets only on the ground floors. It wasn’t until the 1980s that the HDB embarked on modernizing them, fitting amenities such as lifts. Exclusion of the majority The Federal Housing Authority/State Housing Corporations lacked a welldefined focus of the class of Nigerians they were trying to assist. It was never clear if their mandate was to improve the accommodation of the poorest Nigerians, assist the masses acquire houses or generally increase the stock of houses. Whatever they thought their mandate was, it had no impact on the poorest Nigerians or on how a majority of Nigerians built or acquired houses. To emphasize, government programmes didn’t feature in the calculations of the vast majority of citizens as they made plans about securing accommodation. The Federal Housing Authority/State Housing Corporations built “low-cost” houses which were not only too expensive for the overwhelming majority of Nigerians considering the levels of income required to purchase them. They also use the State’s power to acquire lands under the Land Use Act

By AGELE ALUFOHAI

In the absence of a mortgage system, personal savings, achieved through significant deprivation and/ or engagement in corruption are often required to build or acquire a house

Lack of incentives for investors Nigeria created a National Housing Fund (NHF) into which workers were to pay 2.5 percent of the salaries in 1991. Insurance firms were required to invest 10 percent of their non-life and 20 percent of their life funds in the NHF and banks 10 percent of the funds they loan out. Potentially, the NHF could have effectively mobilized significant funds for providing long-term mortgages. But there is too wide a difference between the rate at which NHF-based mortgages were made i.e. 6 percent and real interest rates, hence banks and insurance have not complied with the requirement to invest in the NHF.

to plan and “allocate” land at prices that are grossly under their market value; these lands in the so-called “government-scheme” estates often ended up been acquired by the rich and powerful, including top bureaucrats. Low-cost houses are often similarly acquired and rented out to low-income people.

N72 trillion market Housing is very big business. The demand for it everywhere is so huge. Satisfying Nigeria’s estimated deficit of 18 million housing units will cost N72 trillion if the cost of each unit is set at N4 million. Historical experience and reality dictate that we approach Nigeria’s housing challenges primarily as a N72 trillion economic opportunity rather than a case for charity.

Social Iniquity Had considerations of social equity featured in the minds and discussions of Nigeria’s policymakers, housing policy is likely to have had welldefined goals. This is why the Singapore model started out

*Alufohai is the President of Nigerian Institute of Quantity Surveyors (NIQS)

BRIEFS US mortgage rate nears record low

verage US rates on fixed mortgages moved closer to their record lows this week, offering more incentive for consumers to buy homes and helping sustain a housing recovery. Mortgage buyer Freddie Mac says the average rate on the 30-year loan rate slipped to 3.34 percent from 3.35 percent last week. That’s near the 3.31 percent rate reached in November, the lowest on records dating to 1971. The average for the 15-year fixed mortgage ticked down to 2.64 percent from 2.65 percent. The record low is 2.63 percent. Lower mortgage rates are a key reason why the housing market began to come back last year and many economists predict the recovery will strengthen in 2013.

London house prices rise by 7%

ouse prices in London rose by 7 percent in the year to the end of October, far outstripping increases elsewhere. The figures from the Land Registry, which records property prices in England and Wales, show the average London home now costs £365,000. Prices have risen in some other regions too, with the average national increase at 1.1 percent and average prices at £161,600. But prices have fallen in the North West, North East, East Midlands and Yorkshire. Separate figures, from the financial information service Moneyfacts, show that mortgage lenders continue to be very fussy about to whom they will lend money. Although the number of mortgage deals on offer to the public has jumped by 8 percent in the past month, to 2,790, the vast majority of them – 67 percent - still require a deposit of at least 20 percent to be put down by the borrower. About 12 percent of the current deals require a 10 percent down payment, and only 3 percent are available to people with a deposit of 5 percent or less. In many of those deals, the lender requires an extra guarantee from the borrower ’s parents, and the interest rates payable by the borrower are considerably higher than for someone taking a mortgage with a larger down payment of, say, 20 percent or 25 percent.

36 — Vanguard, MONDAY, JANUARY 7, 2013

Appointments

vicahiyoung@yahoo.com 08033348923

LASTMA GM becomes NIMechE BRIEF fellow

Alo, Nweke join Berger Paints Board

ERGER Paints Nigeria Plc, has announced the appointment of Dr. Alo Olademiji Israel and Mr.Nelson Chidozie Nweke, into its Board of Directors. The duo of Israel, a management expert and Nweke, a seasoned financial guru, joined the board as non- executive directors aimed at enhancing the composition Nigeria’s leading paints and allied products manufacturing company’s board. Dr, Israel, a Fellow of the Chartered Institute of Personnel Management of Nigeria, CIPM, is presently the Managing Director and Chief Executive Officer of Excel Professional Services Limited. Excel Professional Services Limited is a leadership and management consulting firm that provides advisory support to leading organizations and businesses in matters of strategy, leadership and governance. Prior to this, he had served as the Director-General of the Financial Institutions Training Centre, FITC, Lagos, (an umbrella training centre for all banks in

Nweke Nelson Olademiji Alo

Nigeria); Executive Director, Coopers & Lybrand Associates, now PriceWaterHouseCoopers and Departmental Examination Officer, Obafemi Awolowo University, Ile-Ife, Osun State. Israel holds a doctorate degree in Industrial Sociology from the University of Ife. On the other hand, Nweke, an Honorary Fellow of the Chartered Institute of Bankers of Nigeria, CIBN, is the Managing Director of Neilville Nigeria Limited, a Lagos-based property and real estate development

company. He is also a non-executive director on the board of Premium Pension Limited and Intercontinental Homes (Savings and Loans). Nweke, who also doubles as an associate of the Chartered Institute of Stockbrokers, CIS, retired from Intercontinental Bank Plc as a Regional Chief Executive (South-South) in 2008. He had served the bank in various capacities such as assistant general manager, deputy general manager and executive director respectively. Nweke holds a B.Sc in Political Science from the University of Ibadan and an M.Sc in Industrial Relations from the same university.

IGERIAN Institute of M e c h a n i c a l Engineers, NIMechE, has honoured the General Manager Lagos State Traffic Management Authority, LASTMA, Babatunde Edu, with a fellowship award. The Institute explained that the award was in recognition of his transformational leadership role in the Lagos State Transportation system. The event which took place in Lagos, was attended by the National Chairman of the institute, Engr Ayo Fanimoku among others. According to Fanimoku, the event was one of the avenues designed by the institute to build culture of excellence of members, adding that it was also an avenue to

AERO wins best West African airline

Edu

4 Nigerian journalists named honourary ambassadors in Netherlands

how to register, the procurement of Netherlands visa and staying in the Netherlands for the duration of their programme. Radio Netherlands offers not less than fifteen courses yearly spaning from 3 months to 1 month, 2 weeks and 1 week.

Aremu

Ilori

Asough

OUR Nigerian journalists have been appointed Honorary Ambassadors of Radio Netherlands Training Centre , RNTC, Holland. They are Ayodele Ilori, Ademola Aremu, Aveseh Asough and Tamani Yusuf. Ilori is an employee of Radio Lagos/Eko Fm and the Lagos state chapter of the Nigeria Union of Journalists, NUJ, Financial Secretary. While Aremu is of the Broadcasting Corporation of Oyo State, BCOS, in Ibadan,

Yusuf Asough is a radio journalism Trainer and Producer in Abuja and Yusuf is the Managing Director/Chief Executive Officer, MD/CEO of Kaduna State Media Corporation. The four journalists who had attended various courses at the Radio Netherlands Training Centre in Holland have been saddled with the responsibility of helping other applicants who willing to improve their knowledge in the courses offered by RNTC. They are to provide information on the courses,

appreciate achievements recorded in their various fields by their members. Speaking, Edu expressed gratitude to the institute for the recognition and noted that for radical change (s) to occur leadership at all levels of government must show love, kindness, sacrifice, fairness and self denial of unnecessary luxuries and should exhibit leadership by example by being discipline, selfless, committed and abiding by the norms and values of the society. On the road traffic law, the General Manager noted that its objective was to ensure sanity and safety on the roads and pledged not to relent on his oars in ensuring free flow Lagos roads.

Obaro Ibru

ERO, a leading airline in West Africa, has won the Best West African Airline of the Year 2012 Award. The Airline received the award at the West African Tourism and Hospitality Awards, WATHA, which took place in Lagos. Speaking, Adedayo Adesugba, the President of the Awards group, said: “The West African Tourism and Hospitality award was formed to recognize organizations and individuals in the Tourism & Hospitality Industry, and as a platform for acknowledging and rewarding creativity among all the participants and operators within the West African region. This event is the largest gathering of Hospitality practitioners within the region. It has over 5000 voters and evaluators involved in the processes with at least 500 operators at the Gala nights award ceremony. We recognize the role Aero has been playing in ensuring that the travelling needs in the ECOWAS region are constantly met.” Commenting on the award, the Managing Director of Aero, Mr. Obaro Solomon Ibru, said: “We are delighted to have won the West African Airline of the year award. We will, however, not relent in our efforts but we will continually look at new and exciting ways of meeting and even exceeding the flying expectations of Nigerians.” Aero has grown to be one of the most reputable regional carriers in West Africa operating over 50 flights with a fleet of modern 737s and Bombardier Dash 8.

Vanguard, MONDAY, JANUARY 7, 2013 — 37

38 — Vanguard, MONDAY, JANUARY 7, 2013

Vision 2020 (PART 3) of power generated and supplied in South Africa is by public institutions and very cheap, the reverse is the case in Nigeria. In fact nobody knows how much power is generated in Nigeria because close to 90% is privately generated and very expensive. The graph below demonstrates our predicament. Before 1999, public power generation in Nigeria was just under 4000MW. Today, we are still struggling to get it up to 5,000MW. Meanwhile, there has been a very interesting development. South Africa has embarked on an expansion programme designed to increase by 25% its power generation and supply. That addition alone will add more power than we generate in this country. In fact, at the moment, the largest power plant in South Africa generates 4,400MW – which exceeds what all our power plants deliver. There is no nation ranked above 30 which generates less than 50,000MW. To close the power gap, we would need to add 8,000MW per annum for the next seven years. Again, let me leave it to each of my listeners to decide if, given our track record, that is realistic. WHERE IS THE CONCRETE PLAN? Since the end of the Second World War, only a few nations

urthermore, we are already aware of the provisions of the 2013 budget. The totals are not much different from the aggregates for the last three to four years; which yielded 6.5-7.5% GDP growth. The Federal government itself had projected growth of 5-6% for the next year – figure which the World Bank and the International Monetary Fund, IMF regard as ambitious. However, even if we accept the Federal government’s projections, we are faced with another year during which another shortfall looms. By the end of next year, we will have six years left to achieve $424 billion; and that is the minimum requirement. Unfortunately, reaching $424 billion will still not propel us to top 20. Indonesia and those other nations from 39 to 20 would not stop growing. A lot more can be derived from these graphs but time being a constraint permit me to stop here. POWER GENERATION AND SUPPLY Every economy runs on power – that means power generated and supplied. Nigeria is no exception. In order not to discourage my listeners too much, I would limit the comparison to two countries – Nigeria and South Africa. COUNTRY RANK POWER SUPPLY South Africa 30 45,000MW Nigeria 41 4,000MW* ? The Nigerian power supply situation needs to be explained. Whereas over 90%

The largest power plant in South Africa generates 4,400MW – which exceeds what all our power plants deliver. There is no nation ranked above 30 which generates less than 50,000MW. To close the power gap, we would need to add 8,000MW per annum for the next seven years.

had grown their GDP by double digits for ten years or more. Among the few were the defunct Union of Soviet Socialist Republics, USSR, Japan and China in recent years. The approach adopted by each nation was unique but there were some similarities in strategy. The first was rapid development of human capital, efficiency in the use of materials and zero tolerance for corruption. Of the three, Japan had the least raw materials endowment, yet from nothing, it rose to become the second largest economy until recently when it fell behind China. The secret to Japan’s success could be summarised as follows. The Japanese

economy could not afford to waste anything. It delivered the right number of engineers and other skilled workers, at the right time for the needs of society as planned. Within ten years after the defeat during the war, Japan had higher literacy than the United States of America and most countries in Europe. Stalinist USSR carried planning to the limit, sometimes to inhuman limits. Those of us who were fortunate to study Soviet Economic Planning procedures would remember that the Input-Output Table was a Soviet economic planning tool. Everything was included in the five year and ten year plans. How many new kilometers of roads and rail lines, housing units, trucks and automobiles, as well as, classrooms were to be added; how many additional hectares of land to be brought into cultivation to produce food and the direction the development of human capital will take to meet social, economic and political needs. Everything was quantified and somebody was held responsible for achieving set targets; failure meant at least a trip to Siberia or, at worst, death by firing squad. The economy grew from the ruins of World War II to become the second largest and one of the most technologically advanced in less than twentyfive years – of sweat, tears and blood. That sort of tight planning made it possible for the USSR, a technologically inferior nation to send the first astronaut to space before the

United States and to spark what later became the Space Race and the exploration of other planets. But, eventually, even the USSR discovered that there were limits to growth, even in a nation under the iron grip of a dictator. After almost two decades of double digit growth, the nation slid into single digit and the break-up of the USSR has left Russia, the dominant country in the former union, growing at about 5-6% per annum. Japan, today, is struggling to grow at 2% per annum. The reasons are not hard to discover. Indeed, one principle of economics provides some of the clue. It is called the Principle of Diminishing Returns. Baldly stated, it warns economic policymakers that as we add resources to produce results we eventually reach a point when additional inputs don’t yield proportional returns. Among the most important variables in the economic plans are markets. For instance, a nation whose rapid growth depends on exports might soon find those markets saturated and unable to absorb more products. When that occurs, the rate of growth slows down considerably. Sometimes, the nations which once imported the nation’s products might start manufacturing their own, or its increasing wealth might make its products more expensive and less competitive, Japan is in exactly that situation now. Years of rapid growth brought unprecedented prosperity but it also brought imitation and competition.

Business Economy

2012: Reforms, Recovery amidst legislative/regulatory imbroglio Continues from page 23 marketing strategies, and introduced value-added services to address specific concerns hindering market growth. To protect minority shareholders, The Exchange kicked off a financial literacy program to educate investors on portfolio construction and the benefits of diversification. It also launched investors’ protection fund to help cushion the effect of losses suffered by investors to unscrupulous stockbrokers. The NSE took time to flash companies that failed in their post listing requirements to protect investors from putting their money in those companies. The NSE recently made history as the first capital market operator in Africa to C M Y K

introduce a Market Quality Report -The “NSE XQuaIReport” which is designed to disclose the extent to which equities traded on The Exchange provide executions at prices better than the prevailing price quotes before an investor places an order among several initiatives. Following the appointment of Stanbic IBTC Capital as the sole government stockbroker for Federal Government Bonds, the Debt management Office, DMO, announced the commencement of bonds trading on the secondary market. The issue of margin loan was also settled with extension of N22.6 billion forbearance package to 84 stockbrokers believed to were

heavily involved in the margin trading. Besides, waiver of stamp duties and exemption of VAT o n transactions on the exchange was also granted by the federal government at the tail end of the year, while those commissions payable to the NSE, SEC and Central Securities Clearing System were removed and included in the list of VAT-exempt goods and services. Market performance Though the year started out on bearish note with NSE AllShare Index (ASI) depreciating by 32.63 points or 0.15 per cent and market capitalisation dropping to N6.533 trillion, but at the close of trading last week NSE All-Share Index appreciated

by 1.69 per cent to close at 27,866.51, while Market Capitalization of the listed equities appreciated by 1.73 per cent to close at N8.907 trillion. According to analysts at Proshare, Nigerian equities ended the year 2012 with an impressive year-todate, YTD, performance of 35.45 percent gain, precisely hitting a 34-months high at 28,078.81 basis points. The Nigerian market garnered above 7,000 basis points amid weak and mixed daily average turnover recorded in the year; on the back of strong and positive market sentiments on the part of investors. “This was however achieved with a 70 percent foreign participation as at December 2012; a far cry from the 53 percent recorded

in 2008 – and a source of concern about the dearth of domestic investor stake in the market recovery push. New listings To A total of 12 companies were delisted from the daily official list for non-compliance to post-listing rules. Some of the the companies include Aluminium Manufacturing Company of Nigeria Plc, Capital Oil Plc, W.A. Glass Industry Plc, Union Dicon Salt Plc, Hallmark Paper Products Plc, Nigeria Wire Industry Plc, and Rokana Industry Plc. Others are Lenards Nigeria Plc and Udeofson Garment Factory (Nig) Plc Abplast and Confidence Insurance. Patina Computer System voluntarily delisted.

Vanguard, MONDAY, JANUARY 7, 2013 — 39

Advertising, Media & Marketing

ulti-Trex Integrated Foods recently launched its new cocoa beverage, Moor, into the market. In this interview, Chief Executive Officer of the Company, Mr. Dimeji Owofemi, said the company has come to complement other big players in the industry. He also gave an overview of the cocoa industry, among other issues, reports Princewill Ekwujuru.

What exactly do you intend to achieve with the introduction of this new product, Moor? Moor is not an unknown kind of product, especially to children. It has got more cocoa in it than any other cocoa- based beverages drink. You get about 20 percent of cocoa powder in it. So, we are coming from a position of strength of producing the cocoa powder which is the main ingredient. For us, the drive is to use our product ourselves, though we still remain very friendly with the big ones. We enjoy their business and patronage and we’ll continue to service them and we know for sure that our take of the industry is nothing near their budget, and the sky is big enough for all to fly. But we want to play big as well, play big in our own right. What informed the company’s decision to go into consumer goods? The country’s population of over 170 million remains one of the attractions since it is

Etisalat, Huawei fetes customers

n line with its commitment to offer best customer service delivery to

Mr. Dimeji Owofemi

We are complementing, not in competition with Cadbury, Nestle – Multi-Trex CEO expected to explode more in the nearest future. Interestingly, they have to feed. And believe it or not, this category of food is becoming the vogue. Nobody would think about five years back that the fast food joint would be a place that you and I would want to patronise as a quickie. The big shopping malls are also gradually coming back. There used to be UTC, Kingsway, Leventis, in the past, they are all coming back. Unless we want to come out with colonisation, people have to come out with competing brands. The launch of the new product is the second in a spate of three months and we have many more coming in. In the last eight years, except for school children and those in the big schools, if you talk of chocolate the first reaction, even for those who know it, are that it’s going to get me fat. But for those who don’t know it, they think it’s the cocoa butter body cream. So there is a need for a lot of awareness that cocoa is really good for your health. In the Netherland, people live an average of 80 to 85 years and they trace it to a bar of chocolate a week. Moor is a beverage and the appeal targets are children and young adults. It’s got cocoa powder in it and it’s got milk and sugar, fortified with minerals and vitamins and it’s a wholly Nigerian product.

Before now, Multi Trex was seen as a Nigerian company prepared to challenge the monopoly of the big players in the industry. But why has this not been achievable? We didn’t come to challenge; we came to complement the industry, especially where there are gaps. It’s like a little child who says when he grows up, he is going to be eating the head of a particular bird, and the head of that bird would not let him grow old enough to do that. So I think there should be enough space for us. I don’t know what their own attitude would be, but I expect them to welcome tiny little competition. It would put them on their toes. The intention is not to push aside Cadbury or Nestle, it’s a tall ambition. But we are not going to remain small for ever as well. It would get to that point when they would have to recognise us as one of those little companies, contributing its quotas. We are friends; they talk to us and we talk to them. They are one of our biggest customers both locally and internationally and I’m sure they are happy with what we are doing.

BRIEFS

Moor is not an unknown kind of product, especially to children. It has got more cocoa in it than any other cocoa- based beverages drink

As the National Vice President of Cocoa Association of Nigeria and Chairman Cocoa Processors Association of Nigeria, what exactly do you think is wrong with the business of cocoa processing in Nigeria, considering the vast tombstones of industries that had once played in that market in the past? As the National Vice President of Cocoa Association of Nigeria and Chairman Cocoa Processors Association of Nigeria, I’m referred to as the bridge between the two. Sometimes there is conflict of interests between the cocoa traders, who feel that cocoa processors

are working against them, while also the processors feel that the traders of the beans are unpatriotic. To your question, nothing is wrong with that industry. The only challenge it is currently facing is what is wrong generally with the country. The business environment here is very harsh. No factory in Nigeria is doing 60-70 percent capacity. So if you are looking at the industry from that perspective, I think to a large extent, it is not a good measure to do that. Aside sourcing Cocoa from Nigeria, have you at anytime imported Cocoa? We attempted it once, but we didn’t import it ourselves. It was a customer , a Togolese by nationality, who approached us; he saw us on the web and said he wanted to sell Cocoa to us and he said he wanted to sell 10,000 tons to us. I laughed because I actually taught it was a fraud (419), I was thinking how somebody from anywhere else comes and defraud me in Nigeria. I taught Nigeria had a trophy for that, but no one can tell, people still make effort to sell sand in Saudi Arabia. So I asked him to come as long as he doesn’t want easy money, nobody can take money from me easily as well, so the guy came to Nigeria and said he was going to deliver cocoa.

customers across the country, fastest growing and most Innovative telecommunications company, Etisalat Nigeria, recently hosted its customers in its ongoing EtisalatHuawei Original Equipment Manufacturer (OEM) Week, targeted at reaching current and prospective subscribers who have purchased or had enquiries about Etisalat products originally manufactured by Huawei. The initiative organised by Etisalat’s Geek Force is designed for all Etisalat Experience Centres to create greater emphasis on selected original equipment manufacturers (OEM) products and offerings while also encouraging customers to purchase original devices at authorized dealer outlets like the Etisalat experience centers nationwide. Speaking at the event held at the Etisalat Experience Centre, Saka Tinubu, Victoria Island, Lagos, Director, Products & Services, Etisalat Nigeria, Mr. Lucas Dada, said that the company will not relent in satisfying the communication needs of its customers across the country. “As a brand that is always attuned to the needs of its customers, Etisalat has shown over the years that it takes customer satisfaction serious. The Etisalat OEM week is one of the innovative ways we at Etisalat seek to enhance our subscribers’ experience using our products and services,” he said.

Konga.com CEO lists benefits of online shopping

he CEO of Konga.com,

an online store in Nigeria, Mr. Simdul Shagaya has described online retail business as the best means for Nigerians to shop. Speaking in Lagos, Shagaya said the convenience that shopping online at www.konga.com offers Nigerians cannot be over emphasized, considering the lack of retail choices available to Nigerians. He said online stores are advantageous because of the comfort this shopping medium provides Nigerians, who hardly have the time to go to shopping malls which are either far from their residence or are too fragmented for their liking.

C M Y K

40 — Vanguard, MONDAY, JANUARY 7, 2013

Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com

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HOW REDUCED BUDGET DEFICIT WILL CHALLENGE THE ECONOMY

t was a welcome departure from tradition when the national assembly received the 2013 budget proposals in early October 2012! Thankfully, the early submission allowed the legislature to effectively sharpen its oversight functions on a host of government ministries and agencies, and in the process, uncover huge shortfalls between approved budget sums and actual implementation in 2012. Indeed, some critics maintain that the legislative oversight inspection and fact-finding tours could not have been thorough considering the hundreds of government agencies that needed to be examined within the very limited time available. Critics have hitherto blamed poor budget implementations on late passage of budgets. However, the evidence of large unspent funds in the coffers of government agencies nationwide at the end of each year may not corroborate this observation. Incidentally, Dr. OkonjoIweala, the Coordinating Minister of the economy had promised at the beginning of her tenure to ensure that budgets were promptly laid before the national assembly, to allow the Legislature and the Executive adequate time to consult and agree on Mr.

President’s budget proposals. In reality, if annual budgets are based on a rolling three to five year medium term framework, it should be possible to present the budget in August/ September each year. Nonetheless, we should commend Dr. Okonjo-Iweala for the earlier than usual budget presentation! Indeed, if the budget receives President Jonathan’s assent in the next week or so late presentation would not be a valid reason for failure to fully implement the 2013 budget. However, it seems Nigerians may have placed too much faith on the impact of comprehensive budget implementation. After all, total capital budget of about 1.7 trillion naira is equal to just about $9 billion, an amount that is grossly inadequate when compared with the speculated requirement of over $100 billion just for provision of adequate power nationwide! Indeed Dr. Okonjo-Iweala had also promised to significantly reduce recurrent expenditure ratio below 70% in steps of between 1% and 2% annually! However, analysts contend that such snail speed adjustment is not in of consonance with the reality of our severe infrastructural deprivations. Fortunately, the adoption of a crude oil price benchmark of $79 per barrel,

instead of the Executive’s insistence on $75 per barrel would mean a daily accretion of about $10 million (i.e. $3.6 billion annually) to budgeted revenue. Thus the earlier

Indeed, if the budget receives President Jonathan’s assent in the next week or so late presentation would not be a valid reason for failure to fully implement the 2013 budget. However, it seems Nigerians may have placed too much faith on the impact of comprehensive budget implementation.

projected 2013 budget deficit of almost a trillion naira would fall by over 550 billion naira with the higher benchmark. The additional $4 per barrel would consequently reduce the need

Consequently, CBN would be induced to borrow hundreds of billions of naira it does not need, while paying interest of between 10% and 15% for the joy of just warehousing idle public funds and sequestering the funds from a credit starved real sector! The profits of commercial banks and other investors in government securities will ultimately become bloated by an additional sum of over 100 billion naira with such government borrowings. Thus, the increased dollar revenue engendered by higher crude benchmark will ultimately also inexplicably deepen our debt burden! We may deduce from the above that our economy appears severely challenged by the prospect of increasing dollar revenue! The CBN’s response to excess liquidity also crowds out the real sector from available credit in the market, and the resultant high cost of borrowing will further precipitate inflation, industrial contraction and increasing rate of unemployment. However, the hydra headed dilemma of increasing dollar revenue and increasing debt and the paradox of increasing wealth and deepening poverty will only be satisfactorily resolved when CBN ceases to substitute Naira allocations for distributable dollar derived revenue.

for additional government borrowing to finance the proposed trillion Naira deficit, which evolved from the earlier deliberate understatement of crude oil price benchmark. Indeed, with prevailing interest rates of between 15% and 17% for government borrowings, we would also avert liability for additional debt service charges of over N75 billion if crude oil benchmark had remained at $75 per barrel. These huge savings are undoubtedly positive outcomes, as our debt burden will fall commensurately by over 550 billion naira in 2013! The additional $4 per barrel has an ugly flip side; the resultant increase in total dollar revenue of over $3.6 billion would paradoxically create severe challenges in the economy, as the substitution of naira allocations for the increased dollar revenue will exacerbate the specter of surplus cash (excess liquidity) when over N550 billion is lodged into the bank accounts of beneficiaries of the federation pool in 2013. This huge cash inflow into the vaults of commercial banks will sustain additional liquidity and increase credit capacity of the banks by over N5 trillion. In such event, the CBN would ‘altruistically’ step in to deepen the ‘racket’ of mopping up excess liquidity with greater vigor!

Business & Economy

igeria has released two improved cassava varieties in an effort to maintain its lead as the world’s largest producer of the root crop, improve incomes of farmers and make them smile. The varieties were developed through a collaborative effort between the International Institute of Tropical Agriculture (IITA) and the Nigerian Root Crops Research Institute (NRCRI), Umudike. The two varieties are originally recognized as IITA developed genotypes: IITA-TMS-I982132 and IITA-TMS-I011206. But with the official release, they are to be known as UMUCASS 42 and UMUCASS 43 respectively. “Both varieties performed well in different cassava production regions of Nigeria with high yield, high dry matter and good disease resistance. The roots of these varieties are

Nigeria releases improved cassava varieties yellow and contain moderate levels of pro-Vitamin A,” says Dr Peter Kulakow, IITA Cassava Breeder. Potential maximum yield of the two varieties is between 49 and 53 tons per hectare, according to pre-varietal release trials that were conducted between 2008 and 2010. Local varieties produce less than 10 tons per hectare. The varieties are also resistant to major pests and diseases that affect cassava in the country including cassava mosaic disease, cassava bacterial blight, cassava anthracnose, cassava mealybug and cassava green mite. Dr Chiedozie Egesi, NRCRI Cassava Breeder, who presented the varieties before the Nigeria Varietal Release committee—the body in charge of officially releasing varieties—said the

varieties have the following distinct qualities: Good for high quality cassava flour—a sought after trait by researchers for the cassava transformation agenda in Nigeria. The other qualities are high dry matter which is positively related to starch and crucial for cassava value chain development; high leaf retention which is positively related to drought tolerance and is crucial for cassava production in the drier regions and in mitigating the impact of climate change, and moderate levels of betacarotene for enhancing nutrition. Over the years, cassava has transformed from being a “poor man’s” crop to now a cash crop and an industrial crop, as cassava is being processed to products such as starch, flour, glucose and

ethanol. This transition has placed demand on cassava. Researchers say developing new improved varieties is one

way that will boost the steady supply of cassava roots to this ever increasing demand.

Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Yemi Adeoye Oscarline Onwuemenyi Franklin Alli Amaka Abayomi Ebele Orakpo Ifeyinwa Obi

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