APRIL 20, 2015
Nigeria shuns World Bank-backed zero gas flaring summit BY OMOH GABRIEL
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hief executives from major oil companies joined senior government officials from several oil-producing countries in Washington to commit, for the first time, to ending the practice of routine gas flaring at oil production sites by 2030 at the latest. The commitment was made on the sideline of the IMF/World Group Spring Meetings in Washington. On the list of participating countries, Nigeria was absent. Those who endorsed the move are Norway, Cameroon, Russian Federation, Kazakhstan, Gabon, Uzbekistan. Others are Republic of Congo, Angola and France. The “Zero Routine Flaring by 2030” initiative – already endorsed by nine countries, 10 oil companies and six development institutions – was launched by United Nations SecretaryGeneral, Ban Ki-moon and World Bank Group President, Jim Yong Kim. They were joined by Royal Dutch Shell Chairman, Jorma Ollila; Statoil CEO, Eldar Sætre; Norwegian Foreign Minister, Børge Brende; Gabonese Minister of Petroleum, Etienne Dieudonne Ngoubou; and several other senior government and corporate officials and representatives of international development banks. The endorsers collectively represent more than 40 per cent of global gas flaring. Every year, around 140 billion cubic meters of natural gas produced together with oil is wastefully burned or “flared” at thousands of oil fields around the world. This results in more than 300 million tons of carbondioxide being emitted into the atmosphere – equivalent to emissions from approximately 77 million cars. If this amount of associated gas were used for power generation, it could provide more electricity (750bn kWh) than the entire African continent is
consuming today. But currently, the gas is flared for a variety of technical, regulatory and economic reasons, or because its use is not given high priority. “Gas flaring is a visual reminder that we are wastefully sending carbondioxide into the atmosphere,” said World Bank President, Jim Yong Kim. “We can do something about this. Together, we can take concrete action to end flaring and to use this valuable natural resource to light the darkness for those without electricity.” By endorsing the initiative, governments, oil companies and development institutions recognise that routine gas flaring is unsustainable from a resource management and environmental perspective and agree to
cooperate to eliminate ongoing routine flaring as soon as possible and no later than 2030. They will publicly report their flaring and progress towards the target on an annual basis. Furthermore, routine flaring will not take place in new oil fields developments. Governments will provide an operating environment conducive to investments and to the development of functioning energy markets. “As we head towards the adoption of a meaningful new international climate agreement in Paris in December, these countries and companies are demonstrating real climate action,” said UN Secretary-General Ban Ki-moon. “Reducing gas flaring can make a significant contribution towards
mitigating climate change. I appeal to all oil-producing countries and companies to join this important initiative.” The World Bank has been active on this issue for 15 years, as a founding member of the Global Gas Flaring Reduction Partnership (GGFR). The Bank works with its partners in GGFR and the United Nations' Sustainable Energy for All initiative (SE4All) to increase the use of associated gas by helping remove the technical and regulatory barriers to flaring reduction. Oil companies and governments that have yet to endorse the initiative are currently undertaking comprehensive reviews of their gas flaring. Many are expected to join the Initiative in the coming months.
The following have endorsed the “Zero Routine Flaring by 2030” initiative (in order of date of endorsement received).
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22 — Vanguard, MONDAY, APRIL 20, 2015
Economy Nations hit by Ebola need $8 billion for economic recovery
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BRIEFING - From left: Dr Babatunde Fowler, Executive Chairman, Lagos State Board of Internal Revenue, Mr. Abimbola Shodipo, Special Adviser on Taxation and Mr. Remi Ibirogba, Commissioner for Information and Strategy, during the 2015 Ministerial Press briefing by Lagos State Internal Revenue Service in commemoration of Governor Babatunde Fashola's eight years in office, held at Alausa, Ikeja, Lagos. Photo: Bunmi Azeez
How pirate attacks cripple fish trawling business in Nigeria BY GODFREY BIVBERE
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oreigners have been accused of deliberately collapsing the local fish trawling business and illegally taking over the business. Some operators who spoke with Vanguard explained that the fish trawling business was huge and responsible for the employment of thousands of Nigerian youths as well as contributing to the economy of the nation in the early 80’s up till early 2000’s. They observed that this trend changed when foreigners became interested in that sector of the economy and began to sponsor attacks on local fish trawlers operating in the country with the intetion to hijack the business. Local operators blame the attacks on pirates who take over their ships, steal valuable properties and harvest by the crew after weeks at sea. A source in one of the fish trawling companies, who spoke on condition of anonymity told Vanguard that the attacks were carried out by paid mercenaries who made it difficult for local fish trawling companies to operate. The source explained that in some cases, the attackers inflict serious injuries on the crew to discourage them from sailing. This, the source pointed out, resulted in many seafarers on board fish C M Y K
trawlers abandoning sailing career. Reacting to the above, immediate past President of the Nigerian Trawler Owners Association, NITOA, Margaret Orakwusi, told Vanguard that she did not think that the attacks are orchestrated by foreigners because the attacks occurred sporadically to different operators both Nigerians and foreigners alike. She, however, noted that the accusation cannot be entirely ruled out because a situation where strange vessels come into the nation’s territorial waters to poach fish illegally should serve as a pointer to the above claim. According to her, “I do not think it is possible because it will be wrong to say that attacks are planned to see
However, the fact that we have strange vessels that come in and poach in our waters gives room for suspicion and such vessels should be arrested
Nigerians out of the business because the attacks happened indiscriminately to both Nigerians and nonNigerians alike. I think that it is a maritime security issue. That is how I see it. “However, the fact that we have strange vessels that come in and poach in our waters gives room for suspicion and such vessels should be arrested. I will agree with you because there has been an increase in the number of vessels committing such crimes, it is against our laws to have people coming here to fish indiscriminately and steal our natural resources.” On the effect of piracy on fish trawling business, the former President of NITOA said that continued pirate attacks have forced a lot of indigenous operators out of the business. She noted that the number of companies operating in the sector in 2005/06 was about 39 but the number has drastically reduced to nine by 2014. According to her, “Fish trawling is a capitalintensive project and it also brings the much needed foreign exchange. There was a time the industry ranked second to the oil industry in foreign exchange earnings; I will like to see us go back to that period. “In 2005/06, we had about 250 trawlers, by year 2014, we had 124. When we were really Continues on page 23
he three nations hardest hit by Ebola in West Africa need $8 billion to rebuild their economies as part of a plan styled on the Marshall Plan. Sierra Leone, Liberia and Guinea can’t wait for commitments from donors before a conference in June, Liberian President Ellen Johnson Sirleaf said Friday in Washington. The Marshall plan was an aid program after World War II used to rebuild the economies of Europe. “The Marshall Plan was a consequence of war,” Guinean
President Alpha Conde said. Ebola is like a war in our countries.” The worst outbreak of the illness has killed more than 10,000 people since December 2013 and pushed the three economies to recession. Before the outbreak, Sierra Leone was the second-fastest growing nation in sub-Saharan Africa because of the development of iron-ore deposits. Decades of violence in Sierra Leone and Liberia had devasted infrastructure and left the health industry underdeveloped. The three nations, with a combined gross domestic product of $13 billion, had fewer than 500 doctors to treat about 20 million people.
Emirates signs Rolls for A380 engines in $9.2 bn deal
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mirates picked Rolls-Royce Holdings Plc to supply engines valued at $9.2 billion for its next Airbus A380s and said the U.K. company is in pole position to power a more fuel-efficient variant of the super jumbo if the plan goes ahead. Dubaibased Emirates will buy 217 of Rolls’s Trent 900 turbines for a batch of 50 four-engine A380s ordered in 2013, ditching the rival General Electric Co.Pratt & Whitney model that was chosen to power its first 90 doubledeckers. Emirates President Tim Clark said at a press conference in London that engines for some of the 50 jets could be converted to more efficient neo types for new engine option if Airbus Group NV opts to proceed with an
upgrade of the A380. The revamped plane would most probably use an improved version of Rolls’s XWB engine designed for the new A350, he said. “As far as the neo is concerned we’ll await the deliberations from Toulouse,” Clark said, referring to Airbus’s headquarters in France. “I don’t want to suggest that the current aeroplane is not a really good machine.” The world’s largest international airline has said it could order at least 100 more A380s if Airbus commits to a neo equipped with engines that consume less fuel, something it has so far failed to do amid a dearth of order interest. The plane would need to deliver efficiency gains of between 10 percent and 13 percent, Clark said today, adding in an interview that while Rolls is leading the way, an order for 200 planes which Emirates might ultimately require might be big enough to bring its U.S. rival’s back into the fray.
NSE moves 315.67m shares worth N3.49bn
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nvestors on the Nigerian Stock Exchange (NSE) on Friday transacted 315.67 million shares worth N3.49 billion in 4,920 deals. The volume of shares traded dropped by 56.14 per cent compared with 719.74 million shares valued at N3.86 billion traded in 4,494 deals on Thursday. First Bank of Nigeria Holdings was investors’ delight, accounting for 38.61 million shares worth N374.05 million. Fidelity Bank came second with a total of
N34.52 million shares valued at N73.97million, while United Bank for Africa sold 33.74 million shares worth N165.77 million. Zenith Bank trailed with 28.44 million shares valued at N650.75 million and Transcorp exchanged 27.51 million shares worth N87.15 million. However, the All-Share Index reversed the three-consecutive day loss improving by 172.80 points or 0.49 per cent to close at 35,005.42 against 34,832.62 achieved on Thursday. Also, the market capitalisation rose by N59 billion or 0.49 per cent to close at N11.928 trillion compared with N11.869 trillion posted on Thursday.
Vanguard, MONDAY, APRIL 20, 2015 — 23
Here are some of the reactions to the above from our numerous readers. Ngozi
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r Omoh Gabriel, thank you for your article. It has helped my state of sanity. Corruption in NNPC is not child’s play. This is where the act of corruption has been perfected that even KPMG cannot but say that no money is missing. But my question is, how can two eminent scholars, first class economists, who have served as CBN about. Governors, be telling lies? The names Aluko and Sanusi and Soludo are not just Omokora are Nigerians; and anybody; they are there is nothing wrong in distinguished people in the selling the Shell interest or the world of Financial NNPC interest to Nigerians Management. I think that rather than to foreigners, more when they speak, we should so at a profit ratio that even listen. My humble instinct favours the Nigerian tells me that because many of Government. our past and present leaders, Moreover, the interests of both military and civilian, may foreign companies like all have skeletons in their Texaco, Mobil, AGIP, ELF, etc, cupboards having benefited should also be terminated and from the corruption in NNPC, sold to other Nigerians. I am it will be difficult to effectively yet to see a single Nigerian or get the type of audit we need. Nigerian company hold any As Mr Omoh said, the missing business interest in any of the money has been so carefully western countries since this crafted into inflated contracts world began. Hardly does any awarded without due process, blackman in North America swap deals and kerosene or Europe even own a simple subsidy scams etc. The retail shop much more solution is for us to forget the mineral exploitation business should be arrested and tried past, vote in a government that like crude oil. for false alarm. is committed to transparency So, Mr. Omoh Gabriel, we Oliver Onyenwe Nwafor and due process, a Nigerians are not imbeciles, Dubai, United Arab Emirates: government that is committed neither are Sanusi and "If you read through the to preserving our Soludo. information given; the entire commonwealth and using it $20 billion is missing from accusation is built on for the country ’s the Federation Account that assumption. development." should have accrued from the We all are aware that there Afam6nr NNPC activities. That money are a lot of financial loopholes "The sponsored agent of is still missing and it’s still in in the Nigerian financial Jonathan and Iweala/ Private Pockets, and must be system. Sanusi and co should Madueke Government are accounted for. Period." have cleared the air from onset now in town to use the six Ama Udu Works at that the suspicion is built on weeks of the forced Ministry of Health, Ebonyi assumption since according Presidential election State: to them, it is beyond the postponement to divert the "What Buhari must do, is that finding capability of audit attention of Nigerians by Sanusi and Soludo must be panels and from what they inventing twists in the missing called to a Panel made up of have put together - they are $20 billion. As if we do not credible citizens, televised for leakages seen in a corrupt know the meaning of “A the public view for most of us system." Doctored Forensic Report.” to know where this money is Garba G Mohammed $20 billion is still missing and lodged. The way these two Bridgeport, Connecticut: unaccounted for by the NNPC. have been talking about the "Missing funds, we Nigerians Nigerians want a Forensic money is evident they know are not naive. That the simple Audit later, when a new where it is. Now GEJ is out of explanation of independent Government is sworn-in. The the way, they should come audit should explain the missing $20 billion is not part clean. I believe they did not whereabout of this missing of the leakage the sponsored get their share and that is why fund simply, not to say this agent of the PDP/Jonathan they were talking. If at the firm is incompetent of such Government has been end, the money they quoted task. But that if a thief steals instructed to frame and write was not missing, then they
Sanusi/Soludo: Where to find the unaccounted billions If at the end, the money they quoted was not missing, then they should be arrested and tried for false alarm
such a huge amount, you will do any thing to cook the book to reconcile your actions because you know an audit will come up one day. And in a country like ours that has a long history of corrupt practices in such large scale, they have perfected ways to account for those billions before hand. Nigerian leaders are the biggest yahoo, yahoo boys parading around. But we common people have been robbed for so long. We are almost getting used to it. And you know what, we are not crying over spilled milk any more. Whatever is done in the dark shall come to light soon, it’s the law of nature." Simon Achadu Sylvester Administrator & legal aide at Nigeria Police Force: "The devil you know is better than the angel you do not know. Both GEJ & GMB are forcing themselves on the nation. Nigeria, as it is now, does not need them; although we have no option than to try new ideas, I mean someone who has not been in government before. Bad luck to people and good luck to itself, I repeat, to itself. That is totally unacceptable to a man of good-conscience and to justice and equity. Public interest and the people’s yarning should always come first in governance, especially in a democratic setting like ours, to avoid anarchy." Cletus Udoh, Lutheran High School, Obot Idim Ibesikpo:
"I had a friend who lamented to me how he opened provision store and hired a young boy to man it. These items were to be sold wholesale. Every time he visited the shop to look at the shelves, count cartons and the boy will tell him there were no sales. One day, the young man left and my friend said he went to check the store and all the cartons were intact not knowing that they were empty." Dauda Sule, Federal Polytechnic, Bida: "All we want is a pro-active leader that can put an end to, or eliminate corruption." Concerned Nigerian "Considering what this writer has said, would it not have been better to say things as they are instead of what has been fed to the media as money in some account which someone is keeping? While I believe Jonathan could have done more to curb this waste, those shouting at the roof top today helped to create the problems and when their cronies started losing, they came up with everything possible to distract the president, including Boko Haram. Today, they are claiming they will fight terrorism with zeal. Unfortunately, we are caught between a president who hasn’t done enough and someone who even in recent time, has shown his penchant for sectionalism and almost certainly to take us to the dark ages."
Economy How pirate attacks cripple fish trawling business in Nigeria Continues from page 22 booming, we had about 35 companies operating in the sector but over the years, it has reduced to just nine. “It’s just like the sea pirate attacks; most of the attacks are not being reported. Probably out of frustration by the owners of the vessels. You know when you continuously report and nothing is happening and the victims are not helped, nobody comes to their aid either financially or otherwise and you look at it and you say
well, if you can keep up with the whole situation, you remain in the business or you just get out. “That is why the number of trawlers has drastically reduced and they are still reducing but then, that is why some of us are happy about what is happening to the price of oil, there must be diversification. “The fishing industry is not just one industry that feeds our people with quality and rich protein products but it is
an industry that can offer employment to a lot of people. It is an industry that can also assist in the growth of auxiliary industries that we use their services,” she concluded. Recently, some vessels belonging to Mid Atlantic Nigeria Ltd were arrested for illegal fishing activities. The arrest was carried out by Nigerian Navy under the supervision of the Federal Department of Fisheries, FDF, in Lagos.
Speaking during the inspection of the arrested vessels, Minister of Agriculture and Rural Development, Dr. Akinwunmi Adesina, warned illegal fishing trawlers operating on Nigeria’s waters to stop their activities. The seizure of the vessels, belonging to Mid Atlantic Nigeria Ltd., was ordered by the Minister at Brawa Ports because the company had not
renewed its licence to fish in 2014. “Every vessel in the Nigerian waters must carry along its valid licence to fish in the sea. “It is such companies as Mid Atlantic that drive away our fishermen from our waters and create unemployment. “You must comply with the law because the days of illegal business in our waters are over,” Adesina said.
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24 — Vanguard, MONDAY, APRIL 20, 2015
Business & Economy
Mobile technology has potential to expand financial inclusion
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4% of adults now have an account, an increase from 24% in 2011. 12% of adults in the region have a mobile money account compared to just 2% globally. Kenya leads with mobile money account ownership at 58%, while Tanzania and Uganda have rates of about 35%. 13 countries in the region have mobile money account penetration of 10% or more. In Cote d’Ivoire, Somalia, Tanzania, Uganda, and Zimbabwe, more adults have a mobile money account than an account at a financial institution. In Kenya more than half of adults who pay utility bills use a mobile phone to do so. And in Tanzania, almost a quarter of those receiving payments for the sale of agricultural products do so into a mobile account. 48% of adults in SubSaharan Africa send or receive domestic remittances: Shifting domestic remittance payments from over-thecounter money transfer operators to accounts could double account ownership in Senegal, Cameroon, Democratic Republic of Congo, and Republic of Congo.
Aviation eexper xper xpertt seeks FG's increased commitment to aviation sector
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n aviation expert, Mr Kolawole Olayinka, in Lagos said the Nigerian aviation sector impact on the economy was not being adequately maximised. Olayinka, who is the British Airways, West Africa Regional Commercial Manager, made the assertion in a lecture titled “Aviation in Nigeria: Opportunities and Challenges”. In the lecture organised by the NigerianBritish Chamber of Commerce, Olayinka said the impact of the nation’s aviation industry contributed in new employments, increased investment opportunities, tourism and hospitality development. He remarked that under the the Billing Settlement Plan (BSP) the revenue generated from IATA- Licenced Travelling Agents from sale of tickets for 38 airlines in 2014 was 1.32 billion dollars. “The aviation industry is a
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‘Trillions of dollars needed in fresh bid to end poverty by 2030’
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ORLD leaders have drawn up ambitious goals to end extreme poverty by 2030 and promote development over the next 15 years, but now they have to figure out how to pay the bill. Trillions of dollars would be required to achieve the 17 Sustainable Development Goals (SDGs) that the United Nations is expected to adopt in September, global experts said. The goals address a wide range of issues from healthcare for all, to education, water, energy and protecting the environment. But in an era of budget austerity, Western governments have made it clear, ahead of a development finance summit in Addis Ababa in July, that foreign aid will be insufficient to do the job. Total official development aid (ODA) currently runs at about $131 billion a year. Heads of state must embrace a new financing framework, one that mobilises ODA, private investment and higher levels of government revenues, United Nations Secretary-General Ban Ki-moon said on Friday. "Much more is needed. We need to shift the conversation from billions (of dollars) to trillions," Ban told a World Bank panel on development finance. Improving tax collection in developing countries was high on the agenda at several meetings held this week during the World Bank/International Monetary Fund(IMF)spring meetings to discuss new models for increasing development finance. Better tax systems would bolster budgets and give governments more funds to invest in social programmes. In many low-income countries, tax as a percent of GDP is under 15 percent against at least 24 percent in advanced economies, IMF data show. Finance ministers asked for more technical help. But equally pressing is the need to crack down on illicit finance, tax evasion by multinational corporations and unjust mining and energy contracts that rob countries of their natural resource wealth, said Nigerian Finance Minister Ngozi Okonjo-Iweala. Multinational corporations have immense expertise on how to exploit tax loopholes, financial knowledge that developing countries lack rendering them unable to capture corporate taxes on profits earned
in their countries, she said. "We are losing a lot of money," Okonjo-Iweala said. "ODA matters but generating our own resources matters even more." A U.N. panel led by former South African President Thabo Mbeki has estimated that Africa loses $50 billion a year to illict finance, double the amount of official development aid that flows into the region, and that multinationals account for 60 percent of the lost revenues. World Bank Managing Director Sri Mulyani Indrawati singled out fighting tax evasion and illicit finance, including the offshore hubs and shell compa-
nies used to transfer money, as important elements for addressing the shortfall in development finance. One U.N. study estimated that $250-300 billion a year in development finance is lost through the outflow of potential revenues that can be taxed. Indrawati said sophisticated financial centers act as "quasienablers," assisting corrupt individuals and legitimate companies in diverting money from the poor. "For the schoolchild in Haiti, the new mother in Malawi or the farmer in Bangladesh, these losses have real impact. They
result in classrooms that are overcrowded, health clinics that are never built and water that is never delivered," she said. The G20 leaders of advanced and major developing countries have drawn up proposals for sharing tax information and improving corporate tax fairness, and they have vowed to set up registries on who owns assets stashed in opaque corporate structures. But Indrawati said more action is needed, calling it an urgent issue for achieving the new development goals.
VISIT - Hon. Minister of Power, Prof. Chinedu Nebo, in a pose after an interactive session with representatives of various civil society and youth groups, who visited his office in Abuja. Right of the minister is the leader of the group, Amb. Splendour Agbonkpolor, President of Coalition of Niger Delta Youth Organisation, flanked by other representatives of the groups.
Insecurity: Nigerian traders rule out compensation for dead members ..call on incoming govt to tackle insurgency BY FAVOUR NNABUGWU
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National Association of Nigerian Traders (NANTS) has discarded any form of compensation for its members that lost their lives to Boko Haram bomb explosions across the country. Also, the traders nationwide set an eight-point road map for the President-Elect, Gen. Muhammadu Buhari come May 29, 2015 when his administration would take over the ruling of this country. NANTS National President, Mr. Ken Ukaoha at an Exco meeting in Abuja on Wednesday, addressed a press conference said that no amount of compensation
could equate the lives of each of its members that died in the various explosions. “As trader, we are not going to task the incoming administration on compensation. How much will the government pay that would assuage the trauma of the families of the dead ones, he asked rhetorically. “What we want to do is to join hands with the government to fight insurgency. We categorise insurgency as a natural disaster which must not repeat itself ”. In all of that, he said, Nigerian traders have leant lessons from the explosion and have become more security conscious with introduction of CCTv,
barricades, gates installed in all the markets to secure traders. On whom to blame for the insurgency, Ukaoha said , “We don’t want to blame the incumbent president for the insurgency.” Driving home the association’s point, NANTS boss said, “Many markets across the country have become theatres of horrendous bomb explosions which have exterminated many traders and destroyed several billions of Naira worth of goods and properties.” Their consolation, he noted, would be for the PresidentElect to wipe out insurgency and other form of insecurity as he had promised to.
Vanguard, MONDAY, APRIL 20, 2015 — 25
Business & Economy
PRESENTATION - From Left:Mr Boma Tai-Osagbemi, Brand Manager, Consumer Segments, Verve, Mr Segun Arinze, Nollywood Veteran and AMVCA 2015 Best Supporting Actor Nominee, Ms Enyioma Anaba, Consumer Segments Marketing Manager, Verve, and Mr Blossom Chukwujekwu, Winner, Best Supporting Actor, AMVCA 2015, at the Verve card presentation which held at BlackHouse Media Office in Lagos.
Navy foils pirates’ attempt to hijack ship in Lagos BY GODWIN ORITSE
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BOUT ten suspected pirates who attempted to hijack a foreign vessel, MT IMAS was at the weekend foiled by the Nigerian Navy (NN) on Lagos waterways. The operation, which was carried out by officers of the Western Naval Command (WNC) who were on preelection patrol, led to the arrest of one of the suspects identified as Shola Sama. It was learnt that the other nine who had successfully boarded the distressed vessel opened fire upon sighting the naval officials but later bowed to their superior force. Sama, 31 and father of three, however denied being a
pirate, claiming he was a businessman going about his lawful duty, adding that he was nabbed while trying to rescue his younger brother who fell into the water after his boat capsided. He claimed that he sells food and other things such as recharge cards to ships with his passenger ship, in exchange of petrol. He said that he usually bought the items for about N2000 and would sell for as much as N4500 and went as much as thrice a day. He said: “I went to sea to collect my product with a 50kg jerrican. I was with my younger brother, Gbenga and I had N400 thousand with me. That is how we usually drive around and I am not the only
one in the business. “After filling the keg, the wave came and there was a vessel that was pumping sand when it passed, the wave hit my boat and it capsided with my younger brother so I was trying to rescue him, it pushed me away. “I was swimming and shouting to ship that was coming. A man said they should throw rope for me. They threw rope and I was begging them to allow me come into their ship that I used to buy market from them. “He said they were coming. They called a white man and they said I should wait. The next minute, they brought a lifebouy and I went to the boat. They asked what I was doing I explained. The next place I found myself was Navy
base.” But explaining how the suspect was caught, Flag Officer Commanding (FOC), WNC, Rear Admiral Jonathan Ango said the distressed vessel radioed the NN that she was under attack by pirates. He explained that NN boat was deployed and after exchange of gun fire with the pirates who had two boats, some of them sustained injuries and were dislodged, while Sama was nabbed. Ango said: “As part of our preparations and actions for the just conducted election, we deployed our ships to cover the inland waterways and also to protect the ships and patrol the territorial water. Fortunately for us, one of the ships, MT IMAS, raised the alarm around 01:20 that she was under attack by pirates and one of our patrol boats that was close by went immediately to her rescue and in the process, saw two boats loaded with pirates and there was an exchange of fire. “We managed to dislodge the pirates from the attack. We injured a few of them and we also captured one of them whom we brought here for proper investigation . “Their intention was to board the vessel and either kidnap the foreigners on board or steal the product. Or take the ship as ransom and go and sell the product somewhere. But the alarm raised through the distress channel which we all have, foiled their attempt. “This is part of the measures we are taking to assure Lagosians especially and Nigerians in general that the NN is very much ready for the security of the water ways “And if there are miscreants or hoodlums who think they can use the waterways to cause any harm or damage, we want to let them know the NN is very much ready and up to the task to prevent them from doing that.”
Promasidor set to host 2015 Quill Awards BY ROSEMARY ONUOHA
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he 2015 edition of the Quill Awards sponsored by Promasidor Nigeria Limited has taken off with the company calling for participation from journalists in the country. The Quill Awards is a platform to reward journalists who have distinguished themselves through dedicated news reportage all year round. Head, Legal/Public Relations of Promasidor, Mr. Andrew Enahoro who led a team of the company’s Management on sensitization visit to Vanguard Head office in Lagos, urged journalists to take advantage of the opportunity and submit entries for the award. Enahoro said that there is need for journalists to show physical attendance at the award ceremony by coming out in large number to support their colleagues. Managing Director of TPT International (Promasidor’s PR Agency), Mr. Charles Igbinidu listed
the award categories to include, Industry, CSR, Brand, education, children; photo story, nutrition and future writer category. He explained that these categories were deliberately chosen because of the focus of Promasidor. “We have different category of prizes; the prize for overall winner is one month training at Thomson Reuters Foundation and one week attachment in a major media house in UK. The last overall winner last year did it at BBC. For the photojournalists the winner goes home with a high-end camera worth N1 million. Since the awards started, I have been very jealous of the photo journalists for what they take home. The price is really high. “The first edition of the awards was held in May 2013 and the stage is now set to host the 2015 edition. th Entry opens on 29 January 2015 and qualifying entry st runs from 1 may 2014 to 30th April 2015,” he disclosed.
Agbakoba urges President-elect to review banks’ lending policy
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r Olisa Agbakoba (SAN), a maritime lawyer and rights activist, on Thursday urged the President-elect, Muhammadu Buhari, to review the lending policy of banks. Agbakoba made the plea in an interview in Lagos. “The heartbeat of any economy is the financial services sector, but because the financial services sector is pursuing the wrong agenda, it is not growing. The financial services sector namely banks, lend money to big men but banks are known to lend money to the average Nigerian. The lending policy of banks is something the Nigerian President must correct. It is not enough to identify two or three billionaires and one bank gives all the money.The country cannot grow that way. It will just simply make one man rich, but when lending is done on a consumer basis, what we call consumer banking, then, 175 million Nigerians potentially can be borrowing and that is the only way that the banks can really, truly grow and become giant. This is the model that banks follow abroad.
FedEx may take over TNT for $4.8bn
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edEx Corp may take over TNT Express in a $4.8 billion deal if the acquisition arrangement between both logistic companies is successful. If the deal comes through it then means that United Parcel Service, UPS, and Deutsche Post in Europe, may be in for a challenge in Europe. European regulators in 2013 blocked a takeover of TNT by UPS due to concerns it would stifle competition, but analysts and executives said on Tuesday FedEx, with its strong air fleet, would complement TNT’s sizeable European road network. “Europe, despite the fact that there has been low growth, is still an enormous market both for import and export,” FedEx Corp. Chief Executive Fred Smith told analysts. TNT gives FedEx access to pan-European service and the domestic UK and French markets, areas where it is not yet a big player, Smith said, while TNT customers will get access to FedEx’s global distribution platform.
26 — Vanguard, MONDAY, APRIL 20, 2015
Corporate Finance By PETER EGWUATU
Learn Africa declares 12k dividend, links drop in turnover to insurgency BY PETER EGWUATU
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earn Africa Plc has proposed a dividend of 12 kobo per share to its shareholders for the financial year ended December 31, 2014, even as it attributed the marginal drop in turnover to the insurgency in the northern part of the country. The company posted a turnover of N2.21 billion for the year ended December 2014, as against N2.27 billion that was achieved in 2013, which reflects a marginal fall of 2.9 per cent (N66.7million). The Profit After Tax, PAT, however halved from N100.13 million to N58.68 million. Speaking on company ’s 2014 financial results, the Managing Director/ CEO, Learn Africa Plc, Mr. Segun Oladipo said “ However, we were able to grow open market sales to schools and booksellers by 27 per cent during the period under review. This is in line with one of our corporate objectives, which is to reduce dependence on patronage by ministries, departments and agencies. As a matter of fact, the marginal decrease in sales figure was due to the security challenges in the Northern parts of our country. The insurgency prevented us from securing bulk orders from states in the region, which are now preoccupied with spending huge sums on the maintenance of law and order. It has also hindered us from pushing our products widely as our sales and marketing team was confined to the safe areas of the region only.” “ Despite all the challenges that we encountered in 2014, our company was able to declare a profit after tax of N58.6m and has proposed a dividend of 12k on ordinary share of 50k for approval of the shareholders at the next Annual General Meeting” he explained Oladipo said “Besides, the outbreak of Ebola epidemic adversely affected our operations, especially because of the closure of schools for several weeks, which coincided with the sales season, when we usually get orders from bookshops and schools.
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fricInvest Capital Partners is in the process of acquiring a minority equity interest in Elephant Group as it has entered a deal with Elephant Group Limited for an equity investment. Information made available to Vanguard revealed that AfricInvest Fund III will acquire a minority equity interest in Elephant Group via an issue of new shares. Meanwhile, Standard Chartered Bank (“SCB”) acted as sole financial advisor to Elephant Group on the transaction. Yemisi DejiBejide Head, Mergers & Acquisition, West Africa commented that “Standard Chartered is delighted to have worked with Elephant Group in achieving its strategic objectives and remains committed to assisting businesses in Africa attract growth capital.”’ Vanguard gathered that the funds raised will be used to boost Elephant Group’s market share in agricultural commodities trading and to deepen penetration of agricultural commodities exports across selected markets in Africa. The Group will also continue to strengthen its backward integration initiatives in the rice, crude palm oil and fertilizer value chain. Tunji Owoeye, Founder and Group Managing Director of Elephant Group, said, “We are excited to partner with an Africa-focused investor with experience in the agricultural sector. The investment will enable the Company to benefit further from government’s drive to promote agricultural productivity in Nigeria. The investment will also allow Elephant Group to transform from an indigenous agricultural commodities company in Nigeria to a vertically integrated PanAfrican player. This transaction will be the first ever private equity investment in the Nigerian agricultural commodities sector, and we view it a strong vote of confidence in the Company” Abiola Ojo-Osagie, Senior Partner & Managing Director of AfricInvest in Nigeria, commenting on the transaction, said: “We have identified a Company led by entrepreneurs and a management team with a good knowledge of the domestic market. Through our partnership with the Elephant Group, AfricInvest is taking advantage of an opportunity to capitalize on
SIGNING - From left : Perfection Nominees Chief Executive Officer, Reverend Samuel Olayemi, President, Chartered Institute of Stockbrokers, (CIS) Mr Albert Okumagba and Registrar/Chief Executive, CIS, Mr Adedeji Ajadi at the signing of MOU between CIS and Perfection Nominees on CIS Professioanl Diploma in Securities and Investment in Lagos.
AfricInvest acquires minority interest in Elephant Group
*Standard Chartered acts as financial advisor
Nigeria’s agricultural transformation agenda to build an enduring institution with a clear potential for growth and regional expansion”. Elephant Group was founded in 1994, and it is the largest and fastest growing
indigenous agri commodities company in Nigeria, where it imports, exports, markets and distributes rice, fertiliser and other agri commodities. The Company is currently ranked #4 in rice and fertiliser marketing with market share of 8% and 10% respectively. Elephant Group owns
extensive distribution and logistics infrastructure in Nigeria and is a critical link in the supply of main staple foods in Africa’s largest and fastest growing consumer market. The Company also has presence in Ghana, Cameroon, Senegal, Niger and Cote d’Ivoire.
First Quarter: GTBank records 17% growth in gross earnings
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uaranty Trust Bank , GTBank Plc has recorded a 17 per cent growth in gross earnings for the unaudited financial results for the first quarter, Q1 ended March 31, 2015. It recorded N79.02 billion gross earnings for the period under review , as against N67.58 billion recorded in the comparative period of 2014, underpinned by strong growth in interest income and effective management of operating expenses and cost of risk. A review of the first quarter , Q1 2015 results shows that the bank continued on a strong growth trajectory, re-affirming its position as one of the most profitable and well managed financial institutions in Nigeria. Profit Before Tax, PBT was N32.65 Billion, an increase of 17% from N28.01 Billion reported in Q1 2014. The Bank reported a Q1 2015 Profit After Tax of N26.56 Billion an increase of 15% over the N23.11 Billion reported in Q1 2014. The bank closed first quarter 2015 with Total Assets and Contingents of N3.15 trillion, customer deposits of N1.69 Trillion and Shareholders’ Funds of N357.59 billion. The Bank’s non-performing loans improved to 3.06 per cent from 3.40 per
cent in the comparative period of Q1 2014 whilst the loan book grew by 28 per cent to close at N1.30 trillion in Q1 2015, from N1.02 Trillion in Q1 2014. The Bank also reported a post-tax ROAE of 29.03 per cent and ROAA of 4.39 per cent respectively. Commenting on the financial results, Segun Agbaje, the Managing Director and Chief Executive Officer of Guaranty Trust Bank plc stated that “a major focus for the Bank this year is to strengthen market positions with distinctive customer propositions in chosen segments in order to deliver long-term sustainable and efficient growth as well as strong shareholder returns”. As a financial institution with a bias for industry leadership, exceptional service delivery and innovation, Guaranty Trust Bank plc has experienced tremendous growth since its inception in Nigeria in 1990 with business outlays spanning Anglophone and Francophone countries of West Africa, East African and the United Kingdom. The Bank presently employs over 10,000 peoples in Cote d’Ivoire, Kenya, Gambia, Ghana, Liberia, Sierra Leone, Rwanda, Uganda and the United Kingdom.
Vanguard, MONDAY, APRIL 20, 2015 — 27
Corporate Finance
Shareholders should use advocacy power to influence policies —Osunkeye By NKIRUKA NNOROM
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he chairman of Lafarge Africa, Mr. Olusegun Osunkeye, has urged shareholder associations to use their power of advocacy to change policies of government that will be inimical to the growth and success of their companies. Speaking at a seminar organized by Independent Shareholders Association of Nigeria, ISAN, in collaboration with PR Plus in Lagos, Osunkeye charged shareholders to engage in active consultation with relevant authorities that could promulgate policies that could affect their investments negatively.
He noted that if some of the regulations emanating from regulators like the Financial Reporting Council of Nigeria, FRCN, and the Supervising Ministry are strictly enforced, some businesses may fold up or sell their assets to pay the hefty penalties, citing an instance of the guidelines/ regulation issued by FRC as published in the official gazette No.90 vol.101 issued October 6, 2014 as an example. He also said that some rules and regulations, for instance, the rules governing transactions with related parties or interested parties as issued by the Nigerian Stock Exchange, NSE, and
approved by Securities and Exchange Commission, SEC, which states that an interested person such as core investors should abstain from voting on resolutions approving the transaction brought before the general meeting for shareholders approval could give rise to unintended consequence. This, he said, is because the core shareholders, who are in few numbers but have substantial holdings and voting power can out-vote the retail shareholders who are large in numbers but relatively small in voting power. He stated that this is where shareholders associations can ameliorate the seeming
FORUM - From left: Head, Information Security, the Nigerian Stock Exchange (NSE), Mrs. Favour Femi-Oyewole; Executive Director, Market Operations & Technology, NSE, Mr. Ade Bajomo; Executive Director, Business Development, NSE, Mr. Haruna Jalo-Waziri and Head, Corporate Services Division, Mr. Bola Adeeko at the Nigerian Capital Market Information Security Forum (NCMISF) held at the Exchange.
lack of voting power. “This is an occasion where shareholders associations, in order to optimize the value of their investments should engage in active conversations with the Financial Reporting Council of Nigeria and the Supervising Ministry and if necessary, extend the dialogue to the National Assembly. They have to prepare, know their subject on the issues they care about and engage in dialogue and management of companies,” he observed. Osunkeye said that shareholders through their associations should have the goal of improving their companies, adding that shareholders activism should be channeled towards ensuring the viability and sustainability of the public companies they own and in the process, seek to influence board and management through collaboration rather than antagonizing board members. The Lafarge boss also noted that shareholders as owners of the company, hold considerable power and the management of the company has the task of meeting shareholders needs by ensuring profitability and at the same time providing shareholders with information on company performance and plans. “The board/management will benefit in masking effort to cultivate a knowledgeable pool of shareholders who are informed about the company activities and goals, who will support management decisions and who have realistic expectation of the company ’s potential,” he said.
Transcorp assures improved financial performance in 2015
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ransnational Corporation of Nigeria, Transcorp Plc, has assured its stakeholders of improved financial performance in 2015 given the results achieved by the company in the 2014 financial year. According to the president/ CEO, Mr. Emmanuel Nnorom, shareholders should expect even better performance across all the business focus areas, including the anticipated implementation of Transitional Electricity Market ,TEM, and an increasing stability in the economy and tourist environment. The company had recorded N41.3 billion revenue in its
audited full year financial results for period ended December 31, 2014, representing 120 percent growth over N18.8 billion posted in the corresponding period in 2013. According to the company in a statement, the revenue growth was particularly impacted by strong contributions by its power business (Transcorp Ughelli Power Limited) and hospitality subsidiary (Transcorp Hotels Plc). Highlights of the 2014 results released on the Nigerian Stock Exchange, NSE, showed that its gross profit increased by 92 percent to N27.6 billion as
against N14.4 billion recorded in 2013. Also, the group operating profit rose to N13.6 billion, an increase of 33 percent over the figure posted in 2013, while the total assets for the group grew by 14 percent from N149.6 billion in 2013 to N170.8 billion during the period. The group net finance cost at N7.8 billion, represents 208 percent increase compared to N2.5 billion reported in the same period in 2013, principally from foreign exchange losses and full year of debt service on acquisition finance loan for Transcorp Ughelli Power Limited. However, profit before tax
declined by 14 percent to N7.7 billion in 2014 from N9.0 billion in 2013. Commenting on the results, the CEO said, ‘We are delighted to record an impressive performance, despite the challenges we experienced within our operating environment. We achieved significant growth in our top line and maintained our margins within acceptable limits despite the delayed implementation of the Transitional Electricity Market (TEM), exchange rate movement and reduced occupancy arriving from security challenges and the viral epidemic in West Africa.
Wall St edges lower as investors look for profit growth
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.S. stocks edged lower on Thursday as corporate results showed little organic growth even as they largely beat profit expectations. While Netflix surged following blockbuster results, curbing the decline on the S&P 500 and Nasdaq, shares of SanDisk slumped following a weak revenue outlook that added to concerns about the pace of top-line improvement. Of the 51 companies in the S&P 500 that have reported thus far, 76.5 percent exceeded profit expectations, well above the long-term average of 63 percent. Only 47.1 percent have beaten on revenue, however, below the historical average of 61 percent. That suggests companies are boosting their bottom lines with cost cuts rather than through business expansion. “This is a pricy market. It needs earnings to sustain it, and the earnings need to be sustained by strong demand. Right now, I’m not thrilled with the level of revenue growth we’re seeing,” said Uri Landesman, president of Platinum Partners in New York.
European stocks fall on Greek crisis; Wall Street turns higher
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uropean stocks declined nearly 1 percent on Thursday, pressured by Greece’s worsening financial predicament, and euro zone government borrowing costs hit new lows. U.S. stocks edged higher on another flurry of betterthan-expected profit reports, including ones from Netflix and Goldman Sachs. German government bond yields fell to record lows after the Financial Times reported that the International Monetary Fund rebuffed an informal request by Greek officials to delay loan repayments. Greek Prime Minister Alexis Tsipras told Reuters on Thursday he was “firmly optimistic” his government would reach an agreement with foreign creditors.
28 — Vanguard, MONDAY, APRIL 20, 2015
Homes & Housing
Professionals demand taxfree building materials
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igerians would continue to pay more for accommodation in major cities until the cost of building materials was subsidised through tax holiday. Executive Secretary of Association of Town Planning Consultants of Nigeria (ATOPCON), Mr. Ayo Adejumo, citing instability in the price of building materials, said high taxes are responsible for the high cost of accommodation in major cities in the country. He urged the Federal Government to provide tax relief for local manufacturers and importers of building materials in order to reduce the high cost of accommodation in major cities. According to him, if the government can grant tax holidays to producers of building materials, it will go a long way in reducing the cost of building houses in the country. Adejumo also urged government to provide enabling environment for private estate developers to strive by providing them with proper incentives, credits and mortgages. He attributed the ugly trend in the housing sector to lack of effective legislation guiding activities in the housing sector.
High-value UK mortgage demand drops
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emand for mortgages fell sharply in the first quarter of the year in the UK, according to research for the Bank of England. Lenders reported that this was the third successive quarter of falling demand, the bank’s Credit Conditions Survey found. Mortgages for high-value property saw the biggest fall in demand since the third quarter of 2008. Demand was expected to bounce back in the second quarter. Some lenders attributed the fall in demand over recent quarters to a combination of changes in regulatory policy and concerns about housing affordability, as well as uncertainty about the outlook for the housing market.
Nigeria’s real estate sector growth projected at 10% annually Stories by YINKA KOLAWOLE, with agency report
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igerian real estate sector has been projected to grow at an average rate of 10 percent over the next few years, according to a report by Nigeria Real Estate Guide, a publication of Detail Commercial Solicitors, a Lagos-based commercial law firm with an active real estate and construction practice. The National Bureau of Statistics (NBS) currently values the sector at $40.9 billion (about N8.06 trillion), which is about 8.01 percent of Nigeria’s $510 billion total rebased GDP. According to NBS, the sector grew by 4.95 percent in 2014. The Real Estate Guide 2015 publication predicated the 10 percent projected growth on “the steady and consistent growth of the real estate sector over the last four years, making it one of the greatest contributors to the Nation’s rebased GDP from the nonoil sector - having contributed 8.03 percent and 11 percent in 2013 and 2014 respectively.” The report noted that major growth drivers in the sector include: an increased inflow of foreign investment (especially from South Africa, MEA and the United States); increased institutional investment from local companies including PFAs and Mutual Funds; the growing population of high net worth individuals; and the targeted intervention of the Federal Government in the housing finance sector. The trend of real estate foreign direct investments indicates a total investment of $71.091 million in six years $4.214 million in 2007, $36.134 million in 2008; $7.978 million in 2009; $14.080 million in 2010; $4.543 million in 2011; and $4.142 million in 2012. Some of the notable projects that boosted the real estate sector include: the World Trade Centre, a N156 billion 37-storey structure being developed by the Churchgate Group in Abuja, expected to house luxury apartments, an A-Grade Office Tower, the Capital Mall and a five star hotel; $180 million The Wing Tower, a state of the art office complex in Lagos being funded through equity
Compact: Functional housing
The trend of real estate foreign direct investments indicates a total investment of $71.091 million in six years
contributions by Oando Plc and RMB Westport and debt financing by Stanbic IBTC
Ltd.; and the multi-billion dollar Eko Atlantic City project, sited on 10 square miles of land reclaimed from the Atlantic Ocean on the Lagos coast, comprising high rise condominiums, schools, commercial properties, a centralized conference center, a U-shaped office tower and the ‘Great Wall of Lagos’ which will be a 7 km long wall of bricks to shield the city, as well as Victoria Island, from the waves of the Atlantic. There is also the $120 million Jabi Lake Mall sitting on 5 hectares of land, as part of the 35 hectare master-planned Actis West Africa and Duval Properties
joint venture Jabi Lake development in Abuja which includes a hotel, residential apartments, and offices spaces. Other drivers of growth in the sector include financing and regulatory interventions such as the establishment of the Lagos Home Ownership Mortgage Scheme (Lagos HOMS), the launching of the Nigeria Mortgage Refinance Company (NMRC) aimed at providing cheaper long term funds to mortgage lenders which would enable them originate more mortgages at lower interest rates and for longer tenors, as is the case in other developed markets.
UK lenders fight to cut mortgage rates
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he battle between lenders to cut down the mortgage rates on offer has intensified, with a company unveiling a new five-year deal with a record low rate of less than 2 percent. On Monday, HSBC said it will launch a five-year fixed-rate mortgage with a rate of 1.99 percent. Experts said this is the lowest rate deal of its type that they have ever seen on the market. However, borrowers must have a 40 percent deposit to take out the deal, which also comes with a
booking fee of £1,499. Charlotte Nelson, a spokeswoman for financial information website Moneyfacts, whose records go back to 1988, said: “This 1.99 percent deal is the first five-year fixed-rate mortgage to be launched below 2 percent and is the lowest on record that Moneyfacts.co.uk has seen.” According to Moneyfacts’ records, the average rate on a five-year fixed rate mortgage lenders are offering across all deposit sizes is now 3.55
percent, having fallen from 4.04 percent a year ago. Five years ago, the average fiveyear fix came with a rate of 5.87 percent. Nelson continued: “The competition to be the lowest in the mortgage market shows no signs of stopping and is great news for borrowers. Moneyfacts.co.uk has seen 15 providers cut rates across their ranges in the past seven days alone. Lenders want to appear in the ‘best buys’ so they are constantly reducing rates to remain competitive.”
Vanguard, MONDAY, APRIL 20, 2015 — 29
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30 — Vanguard, MONDAY, APRIL 20, 2015
Insurance
Premium Pension gets new independent director
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rs. Mosun BeloOlusoga has been appointed as an independent director of Premium Pension Limited to replace Mr. Paul Usoro (SAN) who formally retired from the board after completing two consecutive terms totaling six years. The appointment has been approved by the National Pension Commission (PenCom). Belo-Olusoga is Chartered Accountant; a distinguished Fellow of both Institute of Chartered Accountants of Nigeria (ICAN) and Chartered Institute of Bankers (CIBN). She began her career as a Trainee Accountant with Coopers and Lybrand (Chartered Accountants) where she qualified as a chartered accountant before joining the then Continental Merchant Bank (CMB) Limited. As a thoroughbred professional, Mrs. BeloOlusoga was specially chosen as a team member who worked with Accenture to develop the Continental Merchant Bank’s strategic plan. She was a pioneer management staff of Guaranty Trust Bank (GTBank) and team leader in the Corporate Banking Division. She also worked in some other departments of the bank before retiring as Executive Director and Head of the Bank’s South- West division saddled with the responsibility of all marketing operations within the region. In the course of her illustrious banking career spanning nearly three decades, she attended several prestigious international training programs and business schools across the globe including, IMD International Lausanne, Switzerland; Harvard Business School Massachusetts; INSEAD, Fontainebleau France; Kellogg Business School, Chicago Illinois, Phillips Consulting, Johannesburg and host of others. She is expected to bring to bear her extensive experience and broad range of competences acquired in banking and financial industry. C M Y K
VISIT - From left: Hasina Andria; Paul Atiom; Wale Onaolapo, MD/CEO Sovereign Trust Insurance Plc; Adewale Adewusi and Olaotan Soyinka, GM, Technical, Sovereign Trust, during a courtesy visit to Sovereign Trust by managers of Africa Reinsurance Energy and Applied Insurance Pool of Nigeria (EAIPN).
Germanwings crash: Aviation insurance to rise globally Stories by ROSEMARY ONUOHA
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he cost of insurance for aviation companies globally may rise if the directorate general of civil
aviation goes ahead with its plans to make it mandatory for pilots to undergo psychiatric test before takeoff as any failure to clear the test could lead to flight cancellations and claims.
This might be just another burden for an industry already facing higher cost of insurance after a Malaysian Airlines flight vanished over South China Sea with 239 people aboard last year and
due to accidents in the aviation industry. Airlines in India, mostly loss-making, may be squeezed further if the DGCA implements the plan. Insurance companies are yet to ascertain the liabilities of such an event since there is no available model to factor in such risks into a policy. “Initially, there will be loading, but based on experience in the first two years, there will be better understanding of the risk,” said TR Ramalingam, head of underwriting at Bajaj Allianz General Insurance. Insurers are waiting for the final word on the mandatory test, which the DGCA is contemplating following the crash of the Germanwings aircraft in the French Alps last month, which killed at least 150 people. The accident was supposedly due to the mental sickness of the pilot who seemed to have deliberately crashed the flight. But the tests could also result in lowering of premium rates if the insurance industry believes such tests could reduce the risk of a mentally instable person piloting an aircraft, which though may be rare given that not many such incidents have come to light. “There will be an increase in premium for pilot’s loss of licence cover but reinsurance companies could look at it positively and reduce reinsurance rates,” said Yogesh.
Evolution of reinsurance market offers challenges
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espite the current market environment being generally positive for primary insurers, the evolution of the reinsurance market highlights several challenges this can create for firms, according to analysts at Moody’s. Ratings agency Moody ’s Investor Services, in its latest report, “Reinsurance Monitor ” said, “We are spending more time discussing reinsurance usage and strategy as part of our meetings with primary insurance companies globally,” explained Karambelas, stressing that this trend mirrors the idea that “insurers’ use of reinsurance continues to evolve. With a wealth of traditional and alternative reinsurance capital readily available, insurers can continue to benefit from a wide source of attractively priced capital. However, should this persist for a prolonged period the abundance of capital, albeit cheap, is likely to create fierce competition among primary
insurers. Competition has been a consistent theme of the global reinsurance sector in recent months, leading to a host of merger and acquisition (M&A) activity, most recently with Endurance’s announced takeover of Montpelier Re. Expanding on the impact of sustained, cheaper reinsurance that is accessible to insurers, Moody’s analyst Kevin Lee added; “Falling reinsurance prices have encouraged insurers to cut commercial property insurance rates but have had less influence on casualty insurance prices where low interest rates have encouraged underwriting discipline.” Karambelas advised that generally, in today’s world, insurers are well capitalized, which in turn results in less dependency on reinsurance. Primary insurers are also “increasingly sophisticated in their evaluation of reinsurance needs.” And the constant supply of cheap, traditional and alternative reinsurance
Reinsurance Monitor” said, “We are spending more time discussing reinsurance usage and strategy as part of our meetings with primary insurance companies globally capital also reflects that insurers “are generally applying savings from lower reinsurance pricing to expand or optimize their reinsurance programs,” noted Karambelas. Beyond competition, another issue facing global primary insurers resulting
from the abundance of reinsurance capacity, and in particular when this capital is combined with broader terms, warns Moody ’s, is the temptation for insurers to write more and more business, “incrementally pressuring primary rates and/ or altering the insurers’ risk profiles.” This raises a valid and interesting point, as simply writing more business because it’s cheap and available could lead to companies being dangerously overexposed, resulting in negative stances from ratings agencies and in the worst instances lead to a fatal blow for the company in question. That being said, should primary insurers make the most of the ample capital in the sector, by being prudent with the business they write and maintaining disciplined underwriting practices, it can also add welcomed geographical and product diversification to their portfolio.
Vanguard, MONDAY, APRIL 20, 2015 — 31
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32 — Vanguard, MONDAY, APRIL 20, 2015
Interview BY OMOH GABRIEL
The realities of fighting
At the just concluded Spring Meetings of the IMF/World Bank Group, Dr. Jim Yong Kim fielded questions from journalists. Excerpts:
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r. Kim, when you said this isn’t about spending billions of dollars, this is spending trillions of dollars. Now you’re talking about trillions, you’re talking about the private sector, the profit-seeking private sector. Governments usually know how to work with the non-profit sector, but they don’t really know how to work effectively with the profitseeking. What are your thoughts about how you’re doing to establish this partnership? If you just look at the numbers, you know official development assistance, foreign aid, was about $130 billion last year, so all of us, the multilateral development banks, were part of that world. And if you add up every dollar that multilateral development banks can provide, it is somewhere in the order of $180-200 billion plus. But we’re talking about $1-1.5 trillion in just the developing countries. So there’s no way to get there without the private sector. Now it’s a very difficult time and capital now is, without question, beginning to move out of the emerging markets. And in order to be able to reach this goal, we’re going to have to be much more clever about how we utilize the extremely valuable grant-based development assistance that countries provide and link it to the kinds of investments that we know will be the creator of jobs and our path to ending poverty. So if you look at all the different sources; and you start really with improved domestic resource mobilization. We’ve got to help countries collect taxes in a more fair and reasonable way. That’s got to be on the table. And you know I was in London literally paying tribute to the U.K. Government and Prime Minister Cameron for sticking with his pledge of providing 0.7 percent of gross national income to development. But there are a lot of criticisms inside the U.K., it is really remarkable that they stood up under this criticism and kept going. One of them was, why should we taxpayers, provide aid to countries that themselves don’t collect taxes, especially from the rich. This is the question that was put on the table. But one of the things we’re learning is that synergy between the public and private sector are part of the great hope going forward. And for us, we focus specifically on providing the small and medium enterprises in developing countries that will create the kind of jobs that will lift people out of poverty. It’s tricky; it is a very complicated business getting that right. Even within our own organisation we have people who are very focused on the public sector and people who are very focused on the private sector and they’re now talking to each other much more, but it is relatively new. My own sense is that we have now got to bring the private sector into the conversation on development, like people like Paul Polman from Unilever C M Y K
who have been extremely dedicated to getting into the development conversation from the beginning. For the millennium development goals, the private sector was never part of the conversation, and we basically asked them to make donations after everything was decided. This time in Addis, for the first time the private sector will be at the table talking to us about how we can reach those goals. It is not about going after the private sector for making profits, if we can channel them in a way where they can do well in the world. You’re pushing this. We really believe that there are many, many win-win-win situations out there. The bottom line is that unless we create bankable projects, projects in which there will be returns, we’re not going to get the infrastructure built. So we focus so much on doing this, we’ve created something called the global infrastructure facility. And specifically it’s focused on using all of our literally 50 years of experience in doing this kind of thing and bringing it to the table so that we can prepare the projects. Now a sovereign wealth fund doesn’t have a whole staff of people that are used to putting projects for bridges in Africa, but we do. So what we’re hoping is that we’ll put those projects together, we’ll bring our safeguards and our preparement standards and everything for the table. We’ll prepare those projects and then the decisions will be then whether to invest. We feel we’ll be able to create a very clear picture of risk and reward. And a lot of these people especially at the pension funds and sovereign wealth funds have all these ideas about these projects being too risky. We think that by bringing our experience to the table, they’ll understand that the risk to reward ratio is very favorable and they’ll begin to invest. What is the World Bank doing in a situation regarding having to build in
—World Bank Presi
World Bank President Jim Yong Kim...Now a sovereign wealth fund doesn’t have a to putting projects for bridges in Africa, but we do
developing countries’ social safety or social security or a situation of a tax system? If you as World Bank Group actually engage these developing countries in these aspects, Let me take what I think I understand your question to be. On the one hand, if there is one thing that I think has changed most dramatically about the World Bank Group, it’s the extent to which we engage our clients in discussions about what the right thing to do is. In the early 1990s, I was part of a group called Fifty Years is Enough. We were on the streets trying to argue for the closing of the World Bank Group. We lost that argument, and very good, because I have this job now. I have to tell you, I have not seen any institution that is as open as the World Bank in taking criticism and also changing its practice over time. Now, the World Bank Group works very closely with countries to try to figure out what is it they want in terms of their own development path, and secondly, we are now aggressively moving forward so that every single project will have beneficiary feedback. In other words, that people that are actually
The bottom line is that unless we create bankable projects, projects in which there will be returns, we’re not going to get the infrastructure built. So we focus so much on doing this, we’ve created something called the global infrastructure facility
benefiting from the program, we are going to get feedback directly from them. We have also worked on programs that increase the accountability by just, for instance, very simple things, like putting posters on the outside of schools saying to the community the hours that the teacher is supposed to be there, and giving them a number to call if they don’t show up. Working with countries, accountability, working with the citizens themselves is extremely important. A critical part of it and one of the things I mentioned is building institutions is extremely important. We are working very hard to build institutions. Some of the problems are inability to collect taxes. There are countries, extremely poor countries, where the top 1,500 wage earners are exempted from paying taxes. We have to call that what it is. This is not acceptable. We want to bring about fair tax systems, and we think what we will find is that often the collecting of higher taxes or doing other things, like removing fuel subsidies, which are basically the most aggressive tax system you can imagine, those kinds of things bringing more money into the public budget will allow countries to be able to provide the kind of social support mechanisms, like cash transfers, that we know to be effective. The strategy that I laid out grows, invest, and insure, it was not always the strategy of the World Bank Group. For a long time, we focused a lot on growth of GDP. This particular formulation is new, that putting growth investment in people and insuring
Vanguard, MONDAY, APRIL 20, 2015 — 33
Interview
poverty
ident
a whole staff of people that are used
the poor against plunging into poverty, this is something new for us. We want to help every country, especially in Africa, get there. A huge part of our focus is going to be on Africa. That’s where I think some of the most difficult challenges exist, but it is also the place where we have the highest ambition. I wonder if you would comment then on The World Bank’s decision to withdraw core funding from the CGIR centers of international agricultural research and seeming withdrawal of World Bank leadership from those very important institutions. So we haven’t withdrawn funding from CGIR. We recognize the importance of agricultural research and we’re simply in the process of finding how we can support it over time. Our focus on agriculture research, getting better seeds, the expansion of extension services, this is all very real, and it’s just simply, what we did, is there was a part of the budget that had been without review, simply renewing different grants to different groups over a very long period of time. We’re simply moving that up into the light of day, and finding the right way to support through other
parts of the budget, these particular efforts. You’ve said almost nothing about the institutional foundations and requirements of the strategy articulated. I’m thinking particularly about land tenure, civil society and democracy. It’s a twenty minute speech. (laughter). But those issues are critical, right? So the involvement of civil society the reference to it was on accountability. And we’ve been working very closely with civil society organizations to increase accountability and there are many ways that we’ve been doing it. For example, in Afghanistan, where travel is so difficult, we actually have brought villages and members of civil society into the project itself by giving them cell phone cameras so they have cell phones and cameras and they actually take pictures of the projects. They also have a function where they can get rid of all the pictures if there are ever questions so they don’t get in trouble, but that level of involvement with civil society just wasn’t happening 20 years ago. And it’s part of the tremendous change in The World Bank group. Also land tenure is a critical issue. Land tenure is one that sorting out land tenure issues is often one of the most difficult things to do. In a country I know well, Haiti this has just been a constant problem. But we work on it and you’re right, it’s extremely important, especially in Agriculture. You talked about violence and how it increases chances for poverty could you elaborate on any World Bank initiatives or plans to encounter the poverty emanating from these hot spots? So you know, when I meet with leaders of governments in the area, especially the new leaders, sometimes they ask us for support for arms, and we can’t do that. We don’t do that. We don’t supply funding for arms. But it’s a constant conversation that I’ve been having with the great thinkers and leaders in that particular region. To what extent is the problem ideological? And to what extent is the problem economic? And so I get a surprising variety of answers. And they span the entire range, from people who say you cannot approach this from an economic
development perspective, it’s an ideological problem to those who say it’s very much an economic problem. So my guess is it’s somewhere in the middle. And right now, what we’re really really focusing on is to try to do everything we can to at least eliminate the potential recruits that are there because they can’t get a job and they don’t have an education. So what are the major things that we’re trying to do? One of the things that I’ve agreed with Dr. Ali, the revered President of the Islamic Development Bank, the thing that we’ve agreed on is that we’re going to work together on a major education initiative. So what we know is that even though the GDP per capita of some of the countries in that region have gone sky high, educational outcomes are still very low. And so I think that something fundamentally different has happened in the prospects for quickly improving educational outcomes. So the Bridge International Academy I’ve told you about it they essentially take learning modules from the Khan Academy, and any of you who have children who have done the Khan Academy I’ve done the Khan Academy myself. Sal Khan is an amazing teacher. And there are fantastic teachers out there in every language and what they do is essentially put very simple but effective lessons into a very simple format on software. So what Bridge Academy does is essentially put very low cost tablets and tablets are as inexpensive as $25 to make, and they put them in the classrooms and as the students learn, the great secret is the teachers are learning too. And that rather than waiting 25 or 30 years to improve the quality of teachers, you bring great teachers into the classroom right away. And for six dollars per student per month, they’re able to do that and then what the teachers do is walk around
We’re not naïve in thinking that measures that are focused on economic development will stop all conflict. But we now are convinced that we’ve got to try and we’ve got to be aggressive about it
World Bank President Jim Yong Kim
and help the students who need the most help. And you know, the great news about the Middle East is that there’s a shared language, there’s a shared literature, there’s a way that we think we could take to scale a new kind of educational program. We focus on the areas that are weakest math, the STEM disciplines Science, Technology, Engineering and Math. And will that make a huge difference? I’m not sure, but we know this is a huge issue and we know that we can have a region wide discussion on education. And then take on others and another huge issue of course is water. We’re not naïve in thinking that measures that are focused on economic development will stop all conflict. But we now are convinced that we’ve got to try and we’ve got to be aggressive about it. We’ve got to think anew about the kinds of interventions that we may be able to take to scale that might have an effect on the conversation. Given the fact that the Soviet’s and the Chinese Systems are so different, both economically, politically and ideologically from those in the West, Is it really possible to work with them, to help end extreme poverty, and particularly are they seriously interested in doing that? Did you say you are from the State Department? State Department, I’ve taken (inaudible). Okay, All right. Because you used the term Soviet, and I was wondering if that’s still, but I know — Oh, sorry. I should — I guess that happened, I’m too old to change. You know, one of the lessons that I know that the leaders of the Asian Infrastructure Investment Bank, and the New Development Bank are going to learn, is that multilateralism is really hard. It’s always been really hard, it continues to be really hard, and the reason it’s really hard is that for us, anyway at The World Bank Group, the reason I have to run back is that our Board lives with us. Our Board is right in the building, you know, and all of the conflicts that exist in the world are present on that Board. But one of the great things about having a Board that lives with us is that the people who are on the Board get to know each other, and what happens is that they find ways of getting past difficulties that they wouldn’t, I don’t think, if they only came a few times a year. So, is China serious about reducing poverty? Oh, my, God. I mean, the Chinese have lifted more people out of extreme poverty than any country in the world, by far, probably 600 million people, and they did it through a very aggressive strategy, focused on growth. And it was growth that happened to great extent in the manufacturing sector, but also in agriculture. So, are they serious about it? Absolutely! You know, are the Russians serious about us? Well, you know, they are also a member in very good standing of course of The World Bank Group, and endorsed fully our goal of any extreme poverty.
34 —Vanguard, MONDAY, APRIL 20, 2015
Economy BY JOE ANATUNE
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he Director General, S t a n d a r d s Organization of Nigeria (SON), Dr. Joseph Ikem Odumodu, entered his second year in February 2012 and started talking something quite different from his administration’s Six-point Agenda: a National Quality Policy which he said is vital and urgent for Nigeria to take solid stand on global trade. In his estimation, it is policy that sets the template for officials, players and fans; in this case the regulators, standards accreditation bodies, facilities and skills for effective standards regime and ultimately, the consumers. In order words, the national quality policy will give the scope and set the boundaries for the regulators, stakeholders, products and services that businesses and society get in the final analysis in terms of quality predicated on management systems, operating environment and human resources development as well the institutions that drive best standard practices and growth. Essentially, a National Quality Policy is an official national document adopted in agreement with the public and private sector operators and which sets objectives on quality and technical regulations. Lack of National Quality Policy means everyone acting according to the whims which has been the bane of the Nigerian society by and large and suspected to be responsible for the poor state of business performance and National Quality Infrastructure, weak regulations and imbalanced international trade relations currently dogging the nation. In fact, a National Quality Policy is vital to good governance because it is the foundation of quality of life of citizens. The Federal Ministry of Trade and Investment through the Standards Organization of Nigeria (SON) set to work on the processes to establishing a National Quality Policy and to this end, on September 26, 2013, the National Steering Committee to formulate the National Quality Policy was inaugurated in Abuja; basically as an interministerial committee to streamline regulatory frameworks and design infrastructure development models for the nation’s quality concept & practices that would form the basis of standards in both the public and private sectors. The broad-based interministerial committee, C M Y K
LAUNCH - From left: Business Development Director, Information Technology and Mobile, Samsung Electronics West Africa, Mr. Daesong Ra; Head, Business Development, Technology and Mobile, Samsung Electronics West Africa, Mr. Olumide Ojo; Managing Director, Samsung Electronics West Africa, Mr. Brovo Kim; Director, Information Technology and Mobile, Samsung Electronics West Africa, Mr. Emmanouil Revmatas; Head, Product Marketing, Information Technology and Mobile, Samsung Electronics West Africa, Ms Olajumoke Okikiolu and Samsung Electronics Brand Ambassador, Banky W at the official launch of the Samsung Galaxy S6 smartphones. headed by Industry, Trade and Investment Minister, Dr. Olusegun Aganga and having the SON DG, Dr. Odumodu as the secretary was to review and harmonize existing quality policies in Nigeria and prepare Draft National Quality Policy that would be acceptable to the stakeholders in readiness for legislation and due implementation as the policy working document. The NQP aims to help define the objective principles and results to be achieved, as well the necessary resources to be mobilized in the field of quality. An important outcome is that the NQP will facilitate the establishment of functional National Quality Infrastructure (NQI) and thereby catalyzing Nigeria’s entry into international trade in line with global best practices – hence enabling competitiveness of locally made products at the world market. At this juncture, we commend the European Union (EU), and the United Nations Industrial Development Organization (UNIDO), for joining hands with Nigeria to deliver the project. Special appreciation must also go to the Honorable Minister, Industry, Trade and Investment, Dr. Aganga and the SON DG Dr Odumodu who particularly must have feared privately that the project could misfire if the committee members did not redouble their efforts. To forestall this, Odumodu caused SON to commit huge financial and human resources
After National Quality Policy draft, what next? as the technical committee was largely drawn from SON experienced staff. With the EU support and UNIDO facilitation, the NSC comprising representatives of both the private and public sectors got marching orders from the minister on the following terms: To review and harmonise existing Quality policies in Nigeria To prepare a Draft National Quality Policy that is acceptable to all stakeholders, and To support the approval and implementation of the National Quality policy. The committee was grouped into seven units with members from both the public and private sectors bearing on each member ’s area of specialization and comparative advantage towards facilitating their work. In addition, technical officers were drawn from SON to serve in the sub-committees as follows: Standards, Metrology, Accreditation, Conformity Assessment/Test laboratory, Communication, National technical Regulation and Budget and planning. It is heartwarming that the Draft National Quality Policy has been produced and presented to Dr. Aganga with implementation schedule built into it so that it is not abstract
but tangible with deliverable values and measureable parameters. The draft document was the result of consultations and inputs from stakeholders across the geopolitical zones. However, a national quality policy does not exist in isolation. An NQP needs to integrate with the regional, continental and global standards. To this extent, the coming National Quality Policy of Nigeria needs integrate the West African Industrial Policy (WAPIC) which main objectives are “to maintain a solid industrial structure which is globally competitive, environment
A National Quality Policy is an official national document adopted in agreement with the public and private sector operators and which sets objectives on quality and technical regulations
friendly and capable of significantly improving the living standards of the people.” Again, the thrust: Manufacturing industries contribution to regional GDP from 7% to 20%; intra community trade from 12% to 40%, and export of ECOWAS manufactured goods to the global market from 0.1% to 1%. The draft policy also stressed the driving forces behind it: the desire to efficiently and effectively manage regulatory responsibilities to achieve the primary mandates of protecting the society and environment; the need for stakeholders to deal with a transparent and reliable state regulatory system without having to battle with bureaucratic vagaries, and the need for stakeholders to give industries supportive standards, metrology, accreditation and conformity assessment schemes that are affordable and accepted globally. And the question follows: Now that Nigeria has a draft National Quality Policy, where do we go from here or, now that we have gotten to the bridge that separated us from quality system societies, are we to move with dispatch or tarry awhile before we launch out with renewed courage? Anatune, a brand strategist wrote from Lagos.
Vanguard, MONDAY, APRIL 20, 2015 — 35
E-Commerce
Kidnap: The ugly side of internet penetration STORIES BY JONAH NWOKPOKU
These terms and conditions absolve OLX of any liability in the event of any loss or injury while transacting on the platform
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ast week, the incident of kidnapping involving the Orekoya children at Surulere area of Lagos, brought into focus the issue of regulation of online classifieds. The children were reported to have been kidnapped by a maid, (Funmilayo Adeyemi) who was hired through a classified advertisement placed on an online classified platform, OLX.com.ng. This has raised some questions about the culpability of the operators of the platform and whether they can be held accountable for the crime and other fraudulent activities prevalent on the platform. What is OLX? OLX is an acronym for Online Exchange. It operates as a national online classified marketplace for used goods. Just about anything can be sold or bought on OLX. These days, criminals and persons who pretend to be what they are not can also be hired unknowingly through the platform. This is because it is accessible through the internet. OLX has a presence in over 106 countries but only present in five African countries including Nigeria, Ghana, South Africa, Angola and Kenya. Operations in Nigeria OLX launched in Nigeria in 2012 after its sister venture, Kalahari.com.ng closed shop in the country citing payment challenges. Since then, the company has latched onto the excitement about anything internet in Nigeria, promoting OLX as the new golden black market. It has especially made huge success since it provides opportunities for people to declutter their homes by selling their used items which did not have a market up until now. However it was not long, fraudsters also latched onto the platform, luring and scamming unsuspecting users through spurious listings. Fraud incidents Many fraud incidents from use of the platform have been reported. Just by googling the words, 'fraud, OLX' will generate results of OLX related fraud stories all over the world. For example, Kunle was scammed in 2014 through a spurious car deal posted on OLX. He was lucky he lost only N10, 000 which he paid C M Y K
Lola Masha - OLX Country Manager, Nigeria as deposit for logistics to bring the car for inspection. Ahmed (not real name) was robbed at gunpoint when he went to meet a buyer. “It was in a public place but the whole thing happened so fast. That was how I lost my iPhone 5s. It was shocking,” he said. “Right now, fraudsters crawl all over the platform looking for unsuspecting sellers and buyers to defraud. There are few genuine deals there. I wish the operators can do something about it,” he added. However, with the recent incident where a maid hired through the platform kidnapped three children for a N15 million ransom, some people are calling for OLX to be held accountable. Why OLX cannot be held accountable While the whole kidnapping
You acknowledge and agree that you are responsible for and must evaluate, and bear all risks associated with, the use of any content
incident lasted, OLX stayed silent. However, when they eventually made a statement, OLX Country Manager in Nigeria, Lola Masha, said that: “OLX is just an online classified site that brings buyers and sellers together to promote trade,” noting: “We take steps to moderate and review all adverts, but we do not participate in the negotiations between buyers and sellers.” “Transactions are performed directly between both parties. In all our marketing campaign, we continuously urge our users to take necessary precautionary checks when using OLX,” she added. What this means is that while OLX regrets the incident, there is nothing they can do to protet their users even in the future. After all, they warned users that any transaction undertaken on the platform is at the user's risks." This position is corroborated by OLX's terms of use of service which makes it crystal clear that users should only use the service if they agree that OLX shall bear no liability resulting from any transactions. Available on the OLX website for user's to read before signing up to use the service, the terms and conditions read thus in part: “OLX is the next generation of free online classifieds. We act as a venue to allow our users who comply with these Terms to offer, sell, and buy products and services listed on the Website. Although you
may be able to conduct payment and other transactions through the Website, using third-party vendors such as PayPal, OLX is not in any way in involved in such transactions. As a result, and as discussed in more detail in these Terms, you hereby acknowledge and agree that OLX is not a party to such transactions, has no control over any element of such transactions, and shall have no liability to any party in connection with such transactions. You use the Service and the Website at your own risk.” It further read: “You understand that OLX does not control, and is not responsible for ads, directory information, business listings/information, messages between users, including without limitation emails outside OLX’s e-mail system or other means of electronic communication. “You acknowledge and agree that you are responsible for and must evaluate, and bear all risks associated with, the use of any content, that you may not rely on said content, and that under no circumstances will OLX be liable in any way for the content or for any loss or damage of any kind incurred as a result of the use of any content listed, e-mailed or otherwise made available via the Service.” These terms and conditions absolve OLX of any responsibilities in the event of any loss or injury while transacting on the platform. With the foregoing, analysts believe that until the operators of the platform decide to take improved measures to protect their users or the Nigerian parliament passes legislation on electronic business to protect online consumers, Nigerians will continue to navigate the murky world of online classifieds at their own risks.”
Pearl Dream selected for Tony Elumelu Entrepreneur Programme 2015
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earl Dream, a platform for folktale and crowd-sourced African stories, have announced their selection to participate in this year’s Tony Elumelu Foundation Entrepreneurship Programme. The Pearl Dream said in a statement that “it is honoured to be amongst other African Entrepreneurs who are also a part of the programme, where they will participate in the learning experience while sharing what they have learned as well as spreading the word of their latest development and mobile application, DreamAfrica. Chief Operations Officer, The Pearl Dream, Brian Asingia said: “TEEP1000 is a true testament that it is time for Africans to solve Africa’s problems with Africa inspired solutions that have a global potential. As a co-founder of The Pearl Dream and creator of our DreamAfrica app, I am humbled to be part of the inaugural TEEP1000 class of 2015 and look forward to connecting and learning from mentors and entrepreneurs alike as we connect African content creators to a global audience, one story at a time.” The Tony Elumelu F o u n d a t i o n Entrepreneurship Programme (TEEP) is the flagship entrepreneurship programme of the Tony Elumelu Foundation, founded by the entrepreneur, investor and philanthropist, Tony O. Elumelu. The programme was inspired among other things, to drive inclusive economic philosophy of Africapitalism, based on the belief that a vibrant African-led private sector is the key to unlocking Africa’s economic and social potential.
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38 — Vanguard, MONDAY, APRIL 20, 2015
“Unsold Nigeria crude grows as buyer interest falls”. PUNCH, Thursday, April 9, 2015, p 41.
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he story by Femi Asu, went on to state that “Weak buying from Asia and other regular buyers of Nigerian crude oil has left a large overhang of March, April and May cargoes, it was learnt”. For those who might not fully understand the implications of that report, it is necessary to spell them out. The first casualty, and it has been in that position since last year, is the 2015 budget which is now nothing more than an academic exercise. With crude oil prices hovering between US$45 and US$60 per barrel, the budget which out-going Finance Minister first based on $78 per barrel crude oil price, had by February been dropped in the dust bin. Now, with volume supplied imperiled by weak demand from our traditional customers, it is obvious that the Age of Crude is surely over in Nigeria – at least for a while. Incidentally, this is not the first time this will be announced on these pages. In an article published in December last year, titled THE AGE OF OIL IS OVER FOR NIGERIA, the point had been made that the forces which had driven the global price of crude oil to the low levels it reached then and also reduced the demand for Nigerian crude are not only long-term in nature, but they were then just gathering momentum. The news report above only points to the major economic crisis facing the nation – starting immediately. By the time President Jonathan hands over the leadership of Nigeria to Buhari, the country would have once again been classified as a near bankrupt economy. Our earnings from crude oil will just about be
Nigeria without oil is now a reality sufficient to pay for all the foreign loans taken by the Federal and state governments. For Buhari and Nigeria, lightening has struck twice in a life time. By the time he was propelled to the Head of the military junta in December 1983, Second Republic politicians, at Federal and state levels had frittered away the first crude oil bonanza and left Nigeria with a huge debt which later became our debt trap. By October 1985, President Babangida, who toppled Buhari, was already lamenting that, “It is true that we have run through one of the greatest financial bonanzas that ever happened to a nation in need; so fast and so recklessly that we may wonder if ever happened at all!” The harsh measures which Buhari took, which should have produced salutary effect, were denounced by the same Nigerians who had been impoverished. Today, as we approach a democratic change of government, we can surely repeat what Babagida said about the bonanza which Second Republic politicians wasted. From 1999 till date, politicians representing all the political parties have once again run through another bonanza more recklessly than in the 1980s. Buhari, once again is fated to inherit a national purse totally depleted by sixteen years of Obasanjo, Yar ’Adua and Jonathan, at the centre. State governors, especially those newly elected, will also find themselves wishing they never ran for office. Even those who are continuing in office face
The harsh measures which Buhari took, which should have produced salutary effect, were denounced by the same Nigerians who had been impoverished
a massive revolt of public servants and the Nigerian populace as they will increasingly fail to fulfill their election promises. So, the second casualties of the impending economic doom are the public servants. Even states which struggled to pay salaries before the elections will now start defaulting in payments. Governors going on May 29, 2015, will simply abscond from their states and leave their successors to face the outrage of public servants. Unpaid contractors constitute the third set of victims of the change in the fortunes of Nigeria. It is almost certain that any contractor, still unpaid by any government — Federal, State or Local – and who is not wellconnected with the President, Governor or Chairman, can forget about being paid for a long time to come. The in-coming governments,
cash strapped meet current obligations, and having failed to receive the kick-backs from overinflated contracts will not be in a hurry to pay past debts. The great wave of defections from PDP to APC is partly a reflection of the desperation of contractors whose money is trapped as their former benefactors leave office. Hundreds of thousands of contractors face personal bankruptcy; and, their banks also risk being savaged by the consequences of both crude oil calamity and the change of governments nationwide. Abandoned projects will proliferate. Every economic catastrophe invariably manifests itself in the banking sector – which had actually placed itself in harms way by financing the buy-out of International Oil Companies, IOCs, by local investors. The rush for the gates by the IOCs should have served as a warning to Nigerians who had more money than sense, and their bankers, that something must be wrong, if so many multi-nationals are leaving. Even IOCs who had taken the position of “ wait and see” in the past are no longer waiting – because they have seen enough. And, what they see is a nation whose oil exploration is no longer attractive. Finally, PIB is dead. Twice the Jonathan administration presented the bill to the National Assembly, NASS, and, twice government lacked the WILL to see it through. The PIB which would have benefited the oilproducing areas immensely will now be buried in the graveyard of procrastination and presidential inertia. Decades from now people from the Niger Delta will continue to shake their heads that one of their sons allowed this opportunity to pass. For the folly of leaders; people perish.
Micro-Finance Stories by PROVIDENCE OBUH
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agos State wing of National Association of Micro finance Banks (NAMB) has called on the Governor elect, Akinwunmi Ambode to ensure loans are made available for entrepreneurs through the sub sector.
Make loans available through MfBs, Lagos NAMB urges Ambode The association made the call through its Chairperson, Mrs. Clara Oloniniyi, in a congratulatory statement, where she said that adequate loans be made available for the growth of entrepreneurs,
especially Micro, Small and Medium Enterprises (MEMEs’) operators in the state. According to her, “Don’t forget those in micro finance banking industry who have
been working relentlessly on poverty reduction in the country and it will be good to have a mayor in office who has made our industry a priority.” She added that it is
Bajaj Auto rewards Nigeria mechanics to enhance skill
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ajaj Auto Limited, manufacturers of twoand three- wheelers, has rewarded some Nigerian Mechanics for outstanding performances in its maiden “Speed to Lead Contest” on fastest person to disassemble and assemble the Bajaj RE4s Engine and responding to series of questions. The winners Mr. Fatai
Amusan of Oregun M e c h a n i c s Association, emerged as the winner with 15 minutes, 41 seconds, Mr Ose Sylvester, Ikosi Ketu Mechanics Association, 16 minutes, 25 seconds and Mr William Olushola, Oregun Mechanics Association, 17 minutes and 7 seconds.
Speaking at the Bajaj Speed to Lead Mechanics Contest in Lagos, Regional Sales Manager, Bajaj Auto, Mr. Veeramani Munuswamy, said that the competition allows technicians to demonstrate their skills and knowledge through a variety of speed drills and problem-solving skills test, saying, “Those that
are most proficient earn valuable prizes. He added that the contest was launched to recognize the skills of the expert technicians in servicing and repairing Bajaj RE4s Keke and give them the opportunity to enhance their talent, having better opportunities in their career.
pertinent for Ambode’s administration to assist micro finance banks in the provision of needed infrastructure in the state, especially in the area of interest rate . She said, “If the loans are given out at four per cent per month, how much do you think it will amount to in a month that the bank will realise enough profit to meet all the various expenses associated with the loan.? “We should all know that that the best panacea to realising objectives for establishing MfBs is an aggressive advocacy for entrepreneurship spirit. But this spirit can only be gingered if those at the windows of powers are friendly to the banks. “The era of finishing from school and the next step is for young graduates to be looking for a job should be over,” she said.
Vanguard, MONDAY, APRIL 20, 2015 — 39
Economy Stories By EMEKA ANAETO, Economy Editor
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total of 1, 219, 052 jobs were created in the Nigerian economy by both public and private sectors in the year 2014. The figures as contained in the latest estimate of jobs creation report of the National Bureau of Statistics (NBS) shows a marginal increase of 4.5 per cent against the total 1,163, 766 jobs created in 2013. These estimates are the results of the Quarterly Job Creation Survey commissioned by the National Bureau of Statistics (NBS) in collaboration with the Office of the Chief Economic Adviser to the President, National Planning Commission and the Federal Ministry of Labour & Productivity. Employment generation being one of the pillars of the present administration’s Transformation Agenda. The objective of the quarterly survey, according to NBS, is to track the number of jobs being created in the economy within a given period of time, provide multisectoral and policy relevant data on the employmentgenerating sectors, seasonality in employment and the labour market. The findings are categorized into Formal sector jobs, Informal sector and Public sector jobs. Formal jobs refer to employment generated in establishments that employ 10 persons and above, or formal professional services that employ less than 10 persons. The Informal jobs are those generated by individuals or businesses employing less that 10 or those businesses operating with little or no structures e.g. those in Agriculture and Wholesale and Retail Trade. While The Public Institutions are the Government Ministries, Departments, Agencies (MDAs), Government Parastatals, Academic and Research Institutions at Federal, State and Local government levels.
Senator Joe Danlami Ikenya
Job creation records marginal growth The findings shows that the Informal sector is the main driver, with over 60 per cent contribution to the overall new employment profile while the Public Sector contributes marginally (less than 2 per
cent) to the employment generation capacity of the economy. The formal sector where big corporations including multinationals belong contributed approximately 37 per cent.
In the period under review the Informal sector created 759,896 jobs showing a significant 11 per cent rise over 628,845 it generated in the preceding year. However a negative trend of steady decline was recorded from
Q2. During the year under review the formal sector employed a total of 438,263 persons a marginal rise of less than one per cent from 432,720 employed in the previous year. The significant feature of the quarterly report for the formal sector is a two- quarter consecutive decline with a massive decline from 145, 464 recorded in Q2 to 78,755 in Q3 followed by a further decline to 76,081 in Q4 2014 in that sector. In 2013 there was a steady rise in Q3 and Q4. No reason was given for this trend by the authorities. Public Sector recorded a very abysmal performance in job creation in 2014 with just 20,893 jobs created, showing a massive decline against 102,201 it created in 2013. The Quarterly Job Creation survey is a nationwide survey, covering all 36 states of the federation including the Federal Capital Territory (FCT). A sample of 5000 establishments was taken across the country covering all sectors of the economy. This round of the survey, for which estimates are being reported, according NBS, achieved a response rate of 82.1percent from the establishments selected in the sample, which is very high by global standard.
State Govts intensify internally generated revenue drive
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here are indications that State Governments are intensifying their revenue generating ability, probably to reduce over reliance on the federal allocation which began a downward trend, month-on-month in the past six months. Early reports from five states of the federation for the fiscal year ended December 31, 2014 also shows some of the states posting over 100 per cent rise in their internally generated revenue (IGR) profile over the five year period (2010-2014) under review. The key revenue heads reported are Pay As You Earn (PAYE), Direct Assessment, Road taxes and sources categorised as ‘’Others’’. Amongst the five states that
have so far concluded audit of their IGR Oyo State tops the list in terms of absolute size with N16.3 billion raised in 2014 alone bringing the total IGR for the five-year period to N65.6 billion. The 2014 figure also shows eight per cent rise over previous year’s record while showing a five year rise of nearly 60 per cent. The figures has been on steady rise year-on-year during the five year period. In the five year summary Bayelsa State raised a total of N11 billion in 2014 alone bringing its five-year total IGR to N41.7 billion. Taking the base year figure of N4.7 billion in 2010, the State achieved over a 100 per cent rise in its IGR capacity during the five year period under review.
Sokoto State has reported a total N5.6 billion in IGR for the year ended December 31, 2014 bringing its total IGR for the five year period to N23.5 billion. The 2014 figure shows a marginal increase of two per cent against previous year but it shows about 42 per cent rise over the five year period, rising marginally every year. Nasarawa State reported a N4.1 billion IGR for the year ended December 31, 2014 bringing the five-year total to N18.2 billion. The 2014 figure shows a marginal increase of 2.5 per cent over 2013, while recording over a 100 per cent jump from the 2010 base year figure of N1.9 billion. Ekiti State, though the smallest volume but like Nasarawa and Bayelsa, also shows over 100 per cent jump
in its IGR increases by the 2014 report. The State’s IGR in 2014 was N3.5 billion showing about 60 per cent rise against previous year’s figure and over 110 per cent rise against the 2010 base figure of N1.6 billion. for the five year period. Public Finance analysts believe all states will eventually report higher figures by the time all the states release their financial reports for the year 2014. They also expected even more aggressiveness in IGR performance in the face of dwindling federal revenue allocation occasioned by the sharp drops in oil revenue month-on-month since last year.
40 — Vanguard, MONDAY, APRIL 20, 2015
People in Business
PZ Wilmar set to make Nigeria global leader in oil palm production BY EBELE ORAKPO & NAOMI UZOR
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Santosh Pillai is t h e Managing Director, West Africa, PZWilmar Limited. In this chat with Financial Vanguard at the company’s factory in Lagos during the recent ISO 22000:2005 certificate presentation to the company by Bureau Veritas. He spoke on the company’s backward integration programme, saying that although Nigeria was once the world’s biggest exporter if palm oil, she currently imports over 350,000 tonnes of palm oil yearly. Excerpts: Backward integration: According to Pillai, the goal of PZ Wilmar, the joint venture between PZ Cussons and Wilmar International, is to take Nigeria back to her glorious days as a world leader in palm oil production. “When we started this palm oil refinery, we simultaneously started our backward integration process. That means we started to grow oil palm in Nigeria. Nigeria was the world’s leader in oil palm in the 1960s and 1970s and Malaysia and Indonesia took the know-how from Nigeria and over the last 30, 40 years, they have perfected it and have now become world leaders in oil palm production. So the intention of PZ Wilmar is to restore Nigeria to its former position
as world leader in oil palm production, therefore, we are not only putting up a refinery here, which has a capacity of 1,000 tons per day, but we are also interested in growing oil palm. We, therefore, set out on a journey to set up 50,000
Government should ensure that every investor in the country is treated fairly and equally
hectares of oil palm plantation in Cross River State. If you visit Cross River State today, we have already acquired 26,500 hectares of land and we are growing the oil palm at Calaro Oil Palm Estate; Ibiae Oil Palm Estate and an estate in Biase. Apart from these, we also acquired the 12,800-hectare oil palm plantation from Obasanjo Farms. The ex-president has his own plantations in Cross
PRESENTATION: Mr. Santosh Pillai, Managing Director, West Africa, PZ Wilmar, receiving the ISO 22000:2005 Food Safety Management System Certificate from Mrs Adenike Akinbote, Systems Certification Manager, Bureau Veritas (2nd left), at the company's Ikorodu factory last week while others watch. River State and we acquired the plantations in 2012. Our goal: "Subject to more land availability, our intention is to grow 50,000 hectares of oil palm. If there is more land available, this joint venture will continue to grow more and more oil palm, our single objective being that we need to grow oil palm in this country because Nigeria has competitive as well as comparative advantage to grow oil palm and to be a global leader also. " So we want to set up a fully integrated project; we will grow palm in this country, we will mill the crude palm oil in
*Oil palm
Cross River State and transport the crude palm oil to our refinery here in Lagos, we will refine it, refractionate it and package it into worldclass brands – Mamador and Devon Kings and we will ensure that through the processes, the consumers in Nigeria will have access to world-class quality edible oil. "That is our intention. This company is not only in the business of creating a fully integrated oil palm project but also in the business of creating very high quality products and brands." Challenges: Speaking on the challenges faced by the company, Mr. Pillai who sees challenges as necessary said: "If there were no challenges, there would be no fun running businesses in any country." Reeling out the major challenges, he said they could be as common as inadequate power supply, infrastructure problems such as roads, availability of fuel etc. "These are common challenges which businesses have to overcome." Govt policies: "The most important challenge we as an organisation face, is government's policy on imports and duties structure in Nigeria. As a very serious and long-term investor in this country, what we expect from government is to ensure there is a levelplaying field; that every investor in the country is
treated fairly and equally and there are no benefits being given to one single company which will bring down the whole industry. That is our only request and we will continue to seek and engage the government and regulatory authorities to ensure there is always a levelplaying field for investors like us," he said. Choice of Cross River: On why the company chose to site its oil palm plantations in Cross River State, Pillai said: "Oil palm can grow anywhere but does well in only select belts of the equator - five degrees north and five degrees south - that is where oil palm grows very well. Cross River and Rivers states come under that oil palm belt. We chose Cross River State because during our entire due diligence process, we went there and we saw that when Nigeria was the world leader in oil palm production, Cross River State was one of the states with a lot of oil palm. Akwa Ibom also has but we have to go to a place where we can do a very big project. "We don’t want to do small projects everywhere. But in the course of time, when we develop more and more, we will definitely select a lot more states. "But right now, we want to concentrate in one place where we can start and do a very good job and then we start to replicate that in other places."
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Vanguard, MONDAY, APRIL 20, 2015 — 41
Aviation By LAWANI MIKAIRU & DANIEL ETEGHE
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he Nigerian A i r s p a c e Management Agency, NAMA, has commenced the calibration of its navigational aids at airports and en-route stations across the country in a bid to further enhance seamless air navigation. According to the Acting General Manager, Public Affairs of NAMA, Mrs Olajumoke Adetona “ the routine calibration exercise was intended to determine the precision and accuracy of
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NAMA commences calibration of navigational aids at airports these navigational aids”. She further revealed that the exercise is being handled by ASECNA of Senegal in collaboration with NAMA Engineers and is expected to last for about two weeks. She added that the exercise would involve the calibration of the agency ’s “Instrument Landing Systems (ILS), Very High Omni-Directional Radio Range (VOR), Distance Measuring
Equipment (DME), Path Approach Precision Indicators (PAPI) and Air Field Lighting Systems.”Other facilities to be calibrated include the Communication Radio Coverage across the nation. In his remarks at the commencement of the calibration exercise in Lagos, the Managing Director of the Nigerian Airspace Management Agency (NAMA), Engr. Ibrahim
Abdulsalam, noted that the operation was “targeted at putting all the navigational
aids at the nation’s airports and en-route stations in optimal capacity in line with ICAO standards to continue to generate precise and accurate signals to guarantee the safety of air navigation in Nigeria.”
Med-View Airline partners First Bank to acquire Boeing 737-400 Classic By LAWANI MIKAIRU
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ed-View Airline has acquired a Boeing 737-400 Classic aircraft, with a capacity for 150 passengers in business and economy classes. This acquisition was financed by First Bank who has a business partnership with the airline. The additional aircraft is part of the airline’s expansion plans to boost its operations. And the company ’s fleet has increased to five Boeing aircraft. Speaking with Aviation reporters during the official unveiling of the new Boeing 737-400 Classic at the domestic wing of Muritala Muhammed Airport , Lagos, the Managing Director of the airline, Alhaji Muneer Bankole, said the aircraft had undergone necessary inspection and certification by the Nigeria Civil Aviation Authority ’s, NCAA, inspectors before it was flew into the country from Thailand. He added that the introduction of the aircraft was an integral part of the airline’s long term business plan, adding that the aircraft would immediately be deployed to Yola route. Bankole further explained that another Boeing 767 aircraft would join the airline’s fleet very soon, saying that the expected aircraft would be deployed to Jeddah and Dubai, which it hoped to commence by the last week in June. According to Bankole, “We are as usual poised to give our customers the best of service and with the introduction of our additional new baby, we will definitely expand our fleet and operations. The aircraft you are seeing today has undergone significant internal enhancements to ensure that our customers enjoy the unique and outstanding onboard experience they have come to expect from the airline.”
42 — Vanguard, MONDAY, APRIL 20, 2015
Tax Matter
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t takes more than just paying your taxes to be a good taxpayer, you must ensure you pay on or before your tax liability is due; if every taxpayer decides to pay their taxes only when they feel like, or when it is convenient for them, then they probably may not pay at all since there may never be such a time that is ‘convenient’ to pay. For this reason, the tax laws are drafted in such ways as to ensure that taxes for a particular period are not carried over to other periods. The statutory date required for a particular tax type to be remitted or filed is called “due date”. Any taxpayer who remits or files returns after the statutory due date is considered late and this attracts certain penalties. The Federal Inland Revenue Service (FIRS) is saddled with the responsibility of ensuring that taxpayers remit and file their taxes as and when due, and also enforce penalties where there is lateness. The lax laws are actually considerate as they give adequate time to allow taxpayers prepare to make payment for each tax type. TAX TYPES AND THEIR STATUTORY DUE DATES 1. Pay-As-You-Ear n (PAYE): PAYE is expected to be remitted by the employer on behalf Samuel Ogungbesan, Ag. Chairman, FIRS of the employee after deducting the appropriate amount of tax from the employee’s monthly salary. The deducted tax is expected to be remitted not later than 10 days after the end of the month for which the tax was deducted or duty to th deduct arose, i.e. 10 of the month after the month deduction was made (Operation of the Pay-As-You-Earn (PAYE) Scheme Regulations Section 7(1)). Annual returns must however be filed with the relevant tax authority, not later than 30 days after the end of the year of assessment – this is usually taken as 31 st January of the deduction attracts a penalty of 10% of company however, returns is expected succeeding year (Operation of the Pay- the amount of tax to be deducted in to be filed within eighteen (18) As-You-Ear n (PAYE) Scheme addition to the amount itself plus months after the company was Regulations Section 10(1)). Failure of interest at prevailing rate (PITA incorporated or not later than six (6) months after the end of its first the employer to deduct or having Section 74(1) as amended). accounting period; whichever is deducted (failure) to pay to the 4. Company Income Tax (CIT) earlier. A company can apply in relevant tax authority within the stipulated time from the day the & Education Tax (EDT): CITA Section writing for an extension of the date amount was deducted or the time the 55(3)(a & b) explains that any for filing their returns for a particular duty to deduct arose, amounts to an company that has been in existence year, provided the application is made offence under the Act. Section 94(1) for more than eighteen (18) months is before the statutory due date and that of PITA (as amended) stipulates a required to file returns every year not the company shows a good cause for penalty of N5,000.00 on conviction, later than six (6) months after the end the inability to meet the statutory due plus N100 for every day in which the of its accounting year. For a new date. The penalty for late filing of CIT failure continues in addition to the principal amount to be remitted. Section 81 (3) of PITA stipulates a penalty of N500,000.00 for corporate bodies and N50,000.00 for individuals for late filing of annual returns upon conviction. Arbitrators encourage people to tap into the M aritime 2. Personal Income Tax (PIT): Association of Nigeria arbitration dispute mechanism. Due date for filing PIT is 90 days after “There is still a lot of information (MAAN) says vibrant national the end of the year, this is usually dissemination we need to do to st maritime arbitration system will taken as 31 March of the following attract quality investors to the encourage people and to let them know year (PITA Section 41(3). The penalty industry and fast-track its that these are the things we do and how for late filing of PIT is the same as that they can benefit from it in the maritime development. of PAYE as prescribed in the PIT Act industry. Dr Omogbai Omo-Eboh, the in Section 82. So, towards that advocacy and 3. Value Added Tax (VAT) & President of the association, said this Withholding Tax (WHT): FIRS in an interview with the News Agency enlightenment campaign, we usually Information Circular 9304 on VAT organise an annual seminar called the of Nigeria (NAN) on Friday in Lagos. prescribes that returns should be ‘Practical Maritime Dispute Resolution’ Omo-Eboh said that the association st rendered on or before the 21 day of adopted the strategy, as arbitration Seminar. In addition to that, every year the Month following that in which the offered desired solutions and as well, we always organise a maritime sales/supply was made. A taxable confidentiality in maritime disputes arbitration workshop as part of objectives person who fails to submit VAT returns to enlighten the public and to for parties in dispute. as stipulated is liable to a fine of demonstrate the practical aspect of how According to him, maritime N5,000 for every month in which maritime arbitration works. One of the regulators and operators need a lot failure continues (VAT Act Section 35). major attractions of arbitration and what of enlightenment and advocacy to The same date applies to the WHT. Failure to deduct or to remit after
Planning to file your returns? Do it before the due dates!
as spelt out in the Section 55 (3) a & b of CITA LFN 2004 (as amended) is N25,000.00 in the first month of failure and N5,000.00 for each subsequent month. 5. Petroleum Profits Tax (PPT): This is peculiar to companies involved in petroleum operations. PPTA Section 30(1) prescribes that an estimated returns should be filed not later than two (2) months after the commencement of the accounting year (this is different from others that are filed at the end of the accounting year). Section 30(2) further states that “if, at any time during any such accounting period, the company having made a return as provided for in sub-section 1 is aware that the estimate in such returns requires revision, then it shall submit a further return containing its revised estimated tax for such period”. In a case where a company has a good reason (satisfactory to FIRS) for which it cannot meet up with the timeframe stipulated in Section 30 - 33 of the PPTA, such company can write to request for an extension in the time which the Board (FIRS) may grant after necessary consideration. At the end of the accounting year, a final tax returns is expected to be filed as stipulated by Section 30(2) of the PPTA not later than five (5) months after the accounting year end. Section 51(1) stipulates an initial penalty of N10, 000 for failure to file returns within the period stated in the Act plus N2,000 for every day the failure continues. 6. Capital Gains Tax (CGT): This is the tax imposed on the gains made from the disposal of an asset such as a house, vehicle, machinery etc. It is charged at 10%. The due date for filing CGT according to the CGTA Section 17(3) is the last day in that year of assessment. It should however be noted that individuals will file CGT returns with the relevant State Board of Internal Revenue while companies will file with the FIRS.
Vibrant arbitration system in maritime sector will is central and cardinal to arbitration is attract quality, says MAAN
that it is confidential. “When you go to the court, you bring your disputes into the public domain, into public glare. Whereas with arbitration, it is very confidential, it is between the parties, their counsel or representatives, and the arbitrator or the arbitrators.” According to Omo-Eboh, a workable dispute settlement mechanism will increase the confidence level in the industry. He said that numerous investors consider industrial dispute resolution seriously, as it engendered confidence and protection of investments. Omo-Eboh stated that the association was working to ensure that more people utilise the facilities available for arbitration.
Vanguard, MONDAY, APRIL 20, 2015 — 43
Advertising & Promotions Stories by PRINCEWILL EKWUJURU
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anufacturers want their brands loved, preferred and upgraded. None want its brand (s) rejected, hated or downgraded, therefore brand owners across the globe have long realized that positioning themselves from within their economic jurisdiction has become a necessary means of winning and sustaining attention in the market writes Princewill Ekwujuru. Even without consciously articulating marketing positioning strategies, lots of brand owners have as far back as history could record, been making statements about their individual characteristics, endowments and peculiarities. Even in this era where majority of dairies are sourced from Italy, China, Kenya, European and Asian countries. Holland as the case may be, remains known as home to finest dairy products that still stand the test of time. Think of the phrase, ‘’Holland home of finest dairy.’’ All over the world, this phrase has shown how Holland is perceived. Or is it Peak milk that is driving this perception for Holland.? From France sells easily in Nigerian stores just for the fact that it is from France.? No. This is because of years of associating the country with romance and personal care. Check out all the perfumes and deodorants worn by users. They derive their names from French imageries and constructs; Cheri L’amour, Blackberry Pour homme, Hummer Eau de toilette. Even the global winery business struggle to relate to France. Is it any wonder that virtually all brandies call themselves ‘’French brandy’’ or ‘’original French cognac.?’’ A positive national brand image confers strong advantages on products from these countries. It also affords them the luxury of price leadership in the market. However, things are changing. Although Nigeria neither has an improved national image despite years of effort at nation branding or marketing nor has as yet, any real brand of significant export potential, rather than what Promasidor Nigeria Limited is doing in the milk market. No wonder in 1993 when Promasidor segmented the milk market, that afforded low income earners the opportunity to drink quality milk. Before then, the milk market was elitist in nature. The success recorded by sachet milk in the market led other brands to toe the line of the new order, and are today enjoying the revolution and evolution propelled by Promasidor. Today however,
AAAN urges President-elect to review national communication architecture
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BRIEFING - From Left: Head, Events and Sponsorship, Etisalat Nigeria, Modupe Thani; Director and Founder, Hear Word, Ifeoma Fafunwa; Nigerian Actress, Joke Silva; and Manager, Public Relations, Etisalat Nigeria, Chineze Amanfo at the press briefing of the second edition of the Etisalat-Sponsored theatre production ‘Hear Word’ at Goethe Institute, Lagos.
Private sector metrics for Nigeria’s dairy industry —-The Promasidor approach segmentation has creped into all segments of the product market; butter, detergent, spirit, biscuit, tea markets to mention a few. The increasing reversal of brand credibility conferment from the previous nationproduct flow to product (s) nation paradigm has potential to change the look-and- feel of Nigeria before the world as advocated by the brand image of Promasidor milk brands. And again some examples will suffice. In 2010 Top global brands rankings, China was ranked 56, from 48 in 2009. But China is easily the destination for most of the products consumed in the world today, especially Africa and Asia. Like manner, Combell, Miksi, Loya milk and Cowbell Choco has become products consumed in parts of Africa. But if what the brands are doing in terms of social responsibility’ in education; NASMAC, provision of portable water, sports; disable soccer is anything to go by then Promasidor ’s second position in the Nigeria diary market, will eventually be giving it a global out look then. Check out the payoff, “Combell our milk” it resonates with the target market, it makes the consumers believe the milk is for them. The taste, number of minerals and vitamins contained in the products gives the company the leverage to be able to compete with global brands. What this says is that sustained good manufacturing practice and aggressive
industrialization and marketing can assist in reshaping the perception index and improve national image. The key thing for Nigerian companies is toe the line of quality as well as develop core competence in given areas just like Promasidor’s milk brands. Over time, it is been noticed that the positive image of a given industry has a way of robbing off on other industries and then the national image. For example, Indian companies are presumed to be good for outsourcing Information Technology, IT, but not for high stake strategic consulting. It is known that India, on account of its IT industry is beginning to sell consulting services to the world. In the same way, ‘Kenya coffee, shoe polish, Kiwi’ implies high quality and not high quality aircraft. The key
driver of change is consistency. At first, a country trying to occupy a perception space will meet cynicism and even outright rejection in the market. Humans are known for adventure and will eventually “try” the product after some time. This trial leads to repeat patronage and then acceptance. Some consumers spoken to on acceptance of the Promasidor milk brands, Peju Ajuwon, said their brands have considerably acceptance as a result of its pricing, vitamins and mineral. For Moses Effiong, the brands taste the same, it is difficult to differentiate them, the brands are doing well he stated. The price is right compare to that of competing brands in the same category. “To drive global acceptance therefore, Nigeria companies need to learn from Promasidor,” Mojidi Kolawole advised.
ADVAN, others midwife new research for marketing challenges in Africa
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t a recently concluded Global Marketing Week 2015 in Marrakech, Morocco, organised by World Federation of Advertisers and co-hosted by the Moroccan Association of Advertisers, GAM. Advertisers Association of Nigeria, ADVAN alongside other trade associations in Africa released new research into the state of marketing expertise and opportunity. President of ADVAN, Kola Oyeyemi, Executive Member,
Kachi Onubogu and Executive Secretary, Ediri Ose-Ediale led ADVAN to the global marketers’ conference. According to Oyeyemi, the new document which seeks to unravel Africa’s marketing challenge was in co-operation with Millward Brown and national advertiser associations in Cameroon (CMA), Kenya (MSK), Morocco (GAM), Nigeria (ADVAN), South Africa (MASA) and Zimbabwe (MAZ).
he Association of Advertising Agencies of Nigeria (AAAN) has advised the President-Elect, General Muhammadu Buhari to review the current national communication architecture as part of his efforts to re-ignite the Nigeria spirit and positively project brand Nigeria. The Association’s President, Mr. Kelechi Nwosu while congratulating the winner of the 2015 presidential election, General Muhammadu Buhari (rtd) and also commending President Goodluck Jonathan for his statesmanship for honourably conceding the elections in a manner that doused tensions across the country and boosted confidence in the future of democracy in Nigeria among global observers, noted that as a neutral but patriotic body, the AAAN had actively promoted a professional agenda for issue based, ethical, smear free campaigning among the political parties.
StarTimes bouquets now 20% up
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ith 20 percent increase across its bouquet, Pay-TV platform, StarTimes, says subscribers are obliged to view channels on its network. The company said this is coming up on the premise that it has an additional five channels available to viewers. The channel the company said are: The new offerings include, Iroko Play, Iroko Plus, AMC Series, Star Zone and Star Sport Focus. Star Sport Focus came live in March, other channels will be viewed by subscribers from May 1. Public Relations Manager, StarTimes, NTA StarTV network, Mr. Israel Bolaji, made the disclosure that the increase is necessary because of the new developments and content borne out of the company ’s desire and commitment to offer value by enhancing access, improving content and by further breaking barriers between the people and the platform and deepening digital TV penetration in Nigeria. C M Y K
44 — Vanguard, MONDAY, APRIL 20, 2015 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997
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ne cannot be certain whether Nigerians would celebrate or decry the recent Central Bank of Nigeria’s decision to reduce the existing limit on the usage abroad of Naira denominated cards from $150,000 to $50,000 per annum, per person. Nonetheless, the directive to banks in CBN’s circular of April 13,2015, may mean nothing to possibly over 98% of our country men, who have never seen the inside of an aeroplane. So why would the CBN enfranchise barely 2% of Nigeria’s 170m population with such privilege, when, every citizen, presumably, has an equal stake in our communal dollar reserves, which, inexplicably fund the consumption habits of a tiny minority of Nigerians when they travel abroad. I suppose one could argue that CBN does not actually exclude any Nigerian from enjoying the luxury of foreign travel with such an extensive capacity to spend foreign exchange on demand, so long as surplus Naira exists in their bank accounts, back home, to fund such spending ; such argument, however, maybe akin to suggesting that high profile Rolls Royce automobiles are also available to all and sundry, so long as your pocket is deep enough! Clearly, by reason of abject poverty because of corruption and deliberate economic mismanagement, over 150 million Nigerians are excluded from liberal personal spending from our common Treasury’s depleting pool of dollar reserves. Nonetheless, it is intriguing that the CBN actually set the earlier limit for convertible Naira ATM cards at $150,000; pray, how many Nigerians earn over N25m per annum, and is it conceivable that such people would carelessly spend their total income on overseas travel expenses without regard to other social
Naira/Dollar ATM cards and inexplicable profligacy and economic needs back home? Consequently, it is probably more plausible to conclude that the CBN management consciously and deliberately left the door open with such a high withdrawal limit to induce and facilitate forex round tripping and capital flight and thereby support those substantial financial leakages, which
CBN’s circular of April 13,2015, may mean nothing to possibly over 98% of our country men, who have never seen the inside of an aeroplane
serve the interest of the rentier class and a tiny business elite. It is no secret that in order to circumvent banking regulatory guidelines, several Nigerians have multiple accounts with different banks and may therefore also have a plethora of ATM cards. Thus, before last week’s reduced limits, a ‘business man’ with say ten ATM cards could transfer about $1.5m or almost N300m in one week’s trip abroad. Furthermore, nothing stops this “business man” on return to Nigeria from obtaining a new set of
ATM cards to repeat such cash movements over and over again every year. Ultimately, if each dollar so transferred, were re-priced in the black market with a N10 premium, our smart Alec would be over N15m richer with every trip. Regretably, the proceeds of such transactions may also be used to fund the smuggling of those contraband consumer goods that jeopardise the operations of local industries; worse still, the dollar exchange values may also inadvertently be used, ultimately, to fund the activities of terrorists and other miscreants who seek to destabilize our nation. Indeed, with the prevailing climate of financial impropriety in our country, it is inconceivable that our Monetary authorities failed to foresee the possibility of such extensive misapplication of the Naira convertible ATM cards. However, Mr Emeka Emuwa, The Managing Director/CEO of Union Bank, labored to explain at a recent press briefing that “we did find that in a number of cases, people were using the cards in a manner that they were not expected to use them, and there have been cases of arbitrage (forex round tripping)”; so in order to sustain stability, the bankers’ committee agreed that “the limit for the use of the Naira debit cards abroad should be reduced”. You may note that, Emuwa, made no mention of any arrest or sanctions for those found culpable of gross misuse of the Naira ATM
Business & Economy CBN reminds banks of consequence of of any product or service dollarisation of economy (Visible or Invisible) in any
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he Central Bank of Nigeria (CBN) on Friday reminded all banks of the consequences of the rising trend of currency substitution and dollarisation of the economy. The CBN, in a circular issued by its Banking Supervision Department, warned all banks to desist from collecting and using dollars for transactions. It reiterated that the Naira currency remained the only legal tender in the country. The apex bank reminded the banks that Section 15 of the CBN Act 2007 provided that the unit of currency in Nigeria C M Y K
introduction of the ‘laissez faire’ Naira convertible debit card and forex sales that required no documentation, it ironically became much easier to transfer $150,000 for no legitimate genuine purpose while a whole ‘trunk’ of papers and several follow ups to the bank would be required to obtain forex allocation for school fees and other living expenses for Nigerian students abroad. Thus, in the face of our rapidly depleting reserves and the clear evidence of the misapplication of the convertible ATM facility, it would certainly be more proactive to reduce the limit of such travel allowances to not more than $10,000 per annum, per person. There is no reason why separate applications cannot be submitted to banks, as in the past, with supporting documents for any legitimate, additional genuine forex requirements above this sum. Curiously, the earlier Naira convertible ATM card limit of $150,000, was, an attempt according to CBN circular of th 26 September 2013, to address the impact of the high volume of dollars imported by Nigerian banks, so as to prevent money laundering; paradoxically, the existing limit for Naira ATM cards abroad before 26/9/13 was just $40,000 per person, per annum, it is surprising therefore that CBN’s strategy against capital flight and money laundering was an authorization for banks to sell $250,000 weekly, to each of the almost 2,000 registered Bureau de change scattered throughout Nigeria. It is not clear how the CBN expected that this arrangement could restrain money laundering or redeem the Naira exchange rate.
shall be the Naira. The circular said, ‘``Section 20 (1) of the same Act provides that the currency notes issued by the Bank shall be legal tender in Nigeria, at their face value, for the payment of any amount. “Section 20 (5) further provides that a person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine or 6 months imprisonment. Based on the above provision, the general public is hereby warned that it is illegal to price or denominate the cost
foreign currency in Nigeria. “And no business offer or acceptance should be consummated in Nigeria in any currency other than the Naira. Consequently, deposit money banks operating in Nigeria are advised to desist from the collection of foreign currencies for payment of domestic transactions, on behalf of their customers.” It, however, said that the warning was without prejudice to foreigners, visitors and tourists, who are encouraged to use their cards for payments or exchange their foreign currency for local currency.
cards abroad! Nonetheless, the Bankers’ Committee’s observation was obviously belated as the situation was already so bad, according to the Union Bank CEO, that the practice had become “a threat to the exchange rate stability of the Naira”. Nevertheless, in view of the several serious economic distortions caused by the convertible Naira ATM facility, the recently reduced limit of $50,000 may be seen as a halfhearted attempt to eliminate its evident adverse consequences. Once again, therefore, one may ask, how many Nigerians earn N10m annually, and whether or not it is feasible that such people would also choose to spend their gross annual salary package on overseas travel expenses and shopping. Surely, developing countries with persistent foreign exchange challenges, such as ours, would be expected to be more judicious in the management and application of the available ‘scarce’ foreign reserves, to the greater good of more Nigerians. Besides, what happened to the discipline and control associated with earlier business or holiday travel allowances, which were available on application through banks to genuine travellers for values between $5,000 $10,000. Furthermore, the preceeding practice also provided for the remittance of school fees and related expenses for Nigerian students abroad after the submission of relevant supporting authentic documentation to respective banks. However, as from September 2013, with the
Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Franklin Alli Ifeyinwa Obi Rosemary Onuoha Nkiruka Nnorom CONTRIBUTORS Princewill Ekwujuru Jonah Nwokpoku Naomi Uzor Providence Obuh LAYOUT
SAVE THE NAIRA, SAVE NIGERIA
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