financial Vanguard by Vanguard Media Limited

MAY 21, 2012

Pix from left Mr. Phillips Oduoza, Group MD/CEO, United Bank for Africa PLC; Chief Israel Ogbue, Chairman and Mr. Bili Odum, Company Secretary at the 50th Annual General Meeting of UBA PLC held in Lagos on Friday. Photo by Lamidi Bamidele

NATIONAL HOUSING FUND:

Banks, insurers owe N8.6trn in 5 years *Operators claim ignorance of provisions in NHF Act *FMBN reports to National Assembly *Developers may take CBN, banks to court By YINKA KOLAWOLE Deposit money banks and insurance companies operating in the country have failed to invest in the National Housing Fund (NHF) as statutorily required under the NHF Act No. 3 of 1992, thus owing the Fund trillions of

Naira in un-remitted monies. Central Bank of Nigeria (CBN) which is supposed to deduct at source from the banks and remit to Federal Mortgage Bank of Nigeria (FMBN), the managers of the Fund, has failed in its responsibility in this regard. Vanguard investigations showed, for instance, that between 2006 and 2010,

banks and insurance firms in the country ought to have invested about N8.58 trillion in the Fund in line with the provisions of the Act. Banks should have invested N8.49 trillion, being 10 percent of their loans and advances for the five year period; while insurance companies should have invested nothing less than

N89.49 billion as part of their NonLife and Life premiums for the period, into the housing fund. The NHF scheme was established to facilitate the continuous flow of lowcost funds for long-term investment in housing for the benefit of contributors to the fund. The NHF Act states that resources of the fund shall consist of contributions by Nigerians both in the public and private sectors; investment in the fund by commercial and merchant banks; investment in the fund by insurance companies registered under the insurance act and; financial contributions by the Federal Government for long-term loans. Investigations by Vanguard revealed that neither deposit money banks nor insurance companies have invested a kobo into the housing fund since inception. But most of the banks are rather offering mortgage products of their own with rates clearly outside the 6 per cent stipulated by the NHF Act. When confronted with the provisions of the Act as regards their expected contributions, officials of these financial institutions claimed ignorance of the existence of such a law. Section 5 of the NHF Act stipulates: â&#x20AC;&#x153;Every commercial or merchant bank shall invest in the fund 10 per cent of Continues on page 18

178.85

-1.25

2,260.00

+36.00

20.49

-0.37

107.36 -0.13 92.15

-0.41

CURRENCY BUYING CENTRAL SELLING CFA 0.2801 KRONER 26.4408 EURO 196.6237 POUNDS 244.6426 RIYAL 41.2489 SDR 235.8402 FRANC 163.5825 DOLLAR 154.7 WAUA 234.9579 YEN 1.9496 RENMINBI 24.4441

0.2901 26.5263 197.2592 245.4333 41.3823 236.6025 164.1112 155.2 235.7173 1.9559 24.5236

0.3001 26.6117 197.8947 246.224 41.5156 237.3647 164.6399 155.7 236.4767 1.9622 24.603

CBN Exchange rate as at 18/05/2012 C M Y K

18 — Vanguard, MONDAY, MAY 21, 2012

Cover Story

Developing Entrepreneurial Spirit in Nigeria Part 1

From right Dr. Adebodun Sanyaolu, Management Consultant; Mrs Oluwafunke Amobi, General Manager, Organisation and Talent Development, Human and Resources division, MTN; Mr. Joseph Odusanya, Group Head, Human Resource/Talent management, Keystone Bank and Mrs Debbie Hollie, Deloitte Consulting Manager, Southern Africa and Mr. David Conradie, Deloitte South African Partner during the Deloitte Talent Management (DTMP) launch in Lagos on Friday. Photo by Lamidi Bamidele.

Banks, insurers owe N8.6trn in 5 years Continues from page 17 its loan and advances at an interest rate of 1 per cent above the interest payable on current account by banks. Every registered insurance company shall invest a minimum of 20 percent of its non life funds and 40 per cent of its life fund in real property development of which not less than 50 per cent shall be paid into the fund through FMBN at an interest rate not exceeding 4 per cent. Nothing contained in the insurance act or relating to investment of insurance companies in real property shall affect the provision of this Act (1991 no 58.).” OPERATORS Officials of banks, who spoke to Vanguard differently, on condition of anonymity, said they were not aware of the provisions in the Act that mandated banks to contribute to the NHF. They were however quick to add that their banks have been contributing to housing development through their various mortgage products. Mr. Gus Wiggle, Managing Director, Linkage Assurance Plc, told Vanguard that though aware of the existence of the NHF Act, he is not aware of any clause in the Act mandating insurance companies to contribute to the Fund. In the same vein, Managing Director, FBN Life Assurance Ltd, Mr. Val Ojumah, said that he is not aware of the clause, adding “I’m not sure that any insurance firm is doing it”. Even the CBN is culpable in this infraction, because it is the duty of the apex bank, C M Y K

under the Act, to collect contributions from banks and remit same to FMBN. Section 11 of the Act states: “Central Bank of Nigeria (CBN) shall collect from commercial and merchant banks at the end of every year and not later than month thereafter, the percentage of their contribution to the fund as specified in section 5 (1) of this Act. CBN shall within two month of making collection under subsection (1) of this Act pay the money to the bank for investment in fund.” However, the CBN has not been complying with this provision. Every attempt to get the reaction of the apex bank to this proved abortive, as correspondences to the Director of Corporate Communications of the bank, Mr. Ugo Okoroafor, were not replied as at the time of filing the story. FMBN The Federal Mortgage Bank of Nigeria (FMBN) was empowered by the NHF Act to manage and administer the Fund to ensure that proceeds are utilised to finance the housing sector of the economy through wholesale mortgage lending to primary mortgage institutions (PMIs). Vanguard also reached out to FMBN to find out if it was aware of these provisions of the Act, and what efforts it has made to ensure compliance by all parties involved. An official of FMBN, who did not want to be named, said the bank is aware of the provisions in the NHF Act that banks and insurance companies are required to invest in the Fund.

“We are aware that the banks are not complying. We have approached the CBN on the matter, it is supposed to be the collecting institution and has not performed. In fact, we have taken the matter to the National Assembly, because the National Housing Fund scheme is an act of parliament which must be respected and obeyed. We have also informed the police for necessary action,” he stated. Figures of Loans and Advances by Nigerian banks from 2006 to 2010, obtained from CBN, showed that banks gave out N2.5 trillion in 2006; N4.8 trillion in 2007; N7.8 trillion in 2008; N34.4 trillion in 2009 and; N35.4 trillion in 2010. These add up to a total amount of N84.9 trillion for the five year period. Given that banks are supposed to invest 10 per cent of their Loans and Advances into the National Housing Fund, about N8.494 trillion should have been invested in the Fund by the banks over the period. On the insurance side, data from National Insurance Commission (NAICOM) shows that total Non-Life premiums of insurance firms in the country for the period 2006 to 2010 is about N599.79 billion. The breakdown is N81.6 billion in 2006; N89.1 billion in 2007; N126.4 billion in 2008; N153.5 billion in 2009 and; N149.2 billion in 2010. For Life premiums over the same period, insurance companies collected a total amount of about N147.55 billion - N13.4 billion in 2006; Continues on page 41

recent collection of essays on entrepreneurial innovation in developing economies, titled ‘Lessons from the Poor’, mentions an aspect of Nigerian clothing design. Examining the traditional adire dye industry, author Thompson Ayodele informs that the bottom 19% of entrepreneurs polled for the study earned more than state and federal civil servants. For the purpose of this essay, the stor y is significant in more ways than one. First, it is a classic instance of entrepreneurial spirit, describing the transformation of an established Yoruba craft into a venture for wealth creation and employment generation. Second, and perhaps only in between lines, it reflects a measure of the serious imbalances that plague Nigeria’s economy. Africa’s second largest economy is a bundle of extreme contradictions; with billions of dollars in annual oil revenue on one end and pervasive poverty for most of its 148 million people on the other. Relative political stability since 1999 has delivered some reform and regulatory initiatives to correct huge and longstanding macroeconomic disparities, yet the country remains overwhelmed by persistently dismal indicators and human development indices. Nigeria’s current per capita GDP of $1,371.31 ranks it below much smaller African economies like Sudan, Congo and Swaziland. The latest UNDP poverty survey of 108 developing nations placed the country at the 80 t h position, below Rwanda and Malawi. Achieving the UN Millennium Development Goals and its own, and more ambitious 2020 target require a paradigm shift in mindset and priorities. It also requires the successful engendering of a broad, pan-Nigerian entrepreneurial spirit! A slew of relevant policy redirections have already been initiated in this regard: The government has deregulated oil prices, disinvested public sector undertakings, created special economic zones and passed assorted legislation to encourage enterprise development. While some of these measures are starting to show positive results, many have been largely ineffective while yet others have

completely collapsed. For instance, a massive privatisation drive launched after 1999 managed to rake up private sector investment. However, Abuja’s simultaneous inclination for microenterprises, instead of small-scale ventures, did little to curb unemployment. The failure or even inadequate success of these measures is attributed primarily to disregard or ignorance of ground realities, and lack of a coherent, consistent, macro-level vision. Nigeria’s unique set of problems calls for broadbased policy intervention from the bottom up, and any individual law or policy that is not part of a unified effort is unlikely to make much difference. The ‘bottom up’ analogy is pertinent, as one of the first things Nigeria ought to be doing is improving the condition of its roads. The business environment in the whole of Africa is crippled with massive infrastructure shortfalls that result in the continent’s high enterprise mortality rate. Significantly, the rate of failure affects older and new entrants alike. A leading cause is almost always infrastructure deficits that critically hamper genuine economic growth and productivity. Since 2008 the government has began to show the political will to implement the market-oriented reforms urged by the IMF such as modernizing the banking system, curbing inflation by blocking excessive wage demands, and resolving regional dispute over the distribution of earnings from the oil industry. GOP rose strongly in 2007-10 because of increased in oil exports and high global crude oil prices. Nigeria likewise suffers from endemic infrastructural woes with regards to roads, communication and especially power (small and large businesses alike across the country rely heavily, and at times exclusively, on backup electricity). There have been no worthwhile attempts so far to radically upgrade the power sector, or attract private investment. Another menacing challenge, compounded by the recent proliferation of religious

Vanguard, MONDAY, MAY 21, 2012 — 19

t is a racket that has survived several governments in the country. It will outlive the Jonathan’s administration, no doubt. Why and how did the Minister discover the anomaly? Was she briefed by officials of the Ministry or is it that someone somewhere is aggrieved with the arrangement and want a redress of the situation to his/ her favour? Unfortunately, the Minister has not come out with these details. What brought about this issue? Definitely, there is something wrong somewhere. Something must have brought this out. For the Minister to say, ‘oh you must pay us’ suggest that somebody somewhere is trying to use the machinery of government to do something in his/her favour. A matter like this ordinarily should be approached with maturity. This would have meant that approaching BA ought not to have been in the public domain for now. Nigeria and Britain have been together for years, with very strong ties, and a few functionaries on both sides should not be allowed to commit class atrocity and then visit it on the two countries. Nigeria has something to

functionaries travel economy class to preserve public funds. BA most times does not have the required passengers in this class flying out of Ghana and in order to encourage them the airline reduces its fare in order not to lose out completely. So comparing fares charged in Ghana to Nigeria is not the issue as no Ghanaian official will be given first class to travel out of Ghana; they fly economy. The demand by the Nigeria Authority is because it is easy for them to go to London in the night by 11: PM, finish their private business in the morning and return to Abuja by 5:00 PM the following day without even their wives knowing they went to London. Even if this class of Nigerians wants first class as usual, are they not supposed to pay from their pockets? Because they want to go to London to transact private business overnight using government funds and do not want anybody to know they were out of the country, is that enough reason for disturbing the

Stella Oduah Ogiemwonyi

Is Aviation Minister fighting a class war or for Nigerians? protect. Today in Britain, Nigerians residing there are almost about 2 million citizens. Provoking a diplomatic row will not be in the best interest of both countries. The racket that is going on between top civil servants, other government functionaries and BA officials is because it is easier for them to board BA to London overnight and return to their desk the following day. Many connive with the Airline to ensure that top government functionaries in Nigeria fly BA in first and business class for that matter. Because it is government's funds being used, this class goes in and out of London at will. It has become a lucrative business for the Airline. To compensate them for making it possible for government functionaries to fly first or business class, complimentary tickets are issued to them or their siblings. That is why the talk is about First class and business class and certainly, nobody is talking about the

he Minister of Aviation deserves public applause for just one thing- mustering the courage to expose a long standing deal between the affluence bureaucrats in government and the British Airways, BA. Those familiar with the industry have confirmed that for a very long time, British Airways has been doing under hand business of giving complimentary tickets to top civil servants and their siblings in favour of their daily patronage of flying first and business class. Many top government functionaries in Nigeria are well aware of this deal. Because it is in their favour, they kept quite about it. The management of British Airways seeing the business opportunity this offers them cashed in on it. The big question is where else in Africa or Europe does BA give complimentary tickets to top government functionaries and their siblings and why? Does the airline give such in Britain? Is this not another form of bribery which many developed economies have barred their businesses from partaking in? How legitimate is what BA is doing? Is BA not compromising the system by this practice? Perhaps knowing what is involved that those who should talk, especially the civil servants in the Aviation industry, who are beneficiaries of the largesse the British Airways get from charging higher for first class and business class to recoup what they give out as complimentary tickets keep quite thus visiting the sins of a few privileged on the generality of the populace who fly BA.

The racket that is going on between top civil servants, other government functionaries and BA officials is because it is easier for them to board BA to London overnight and return to their desk the following day.

economy. If there is need for air fare review, will it not be for all classes of fare?

t seems odd that the Minister did not get it right in comparing the airline fare in Nigeria with what they charge in Ghana. It is only in exceptional cases that the government of Ghana approves first class or business class ticket for its serving officials. Most travel economy. In most part of the world, government

nation and scattering an existing relationship between Nigeria and Britain under the pretense of acting in the best interest of Nigeria. If they are seeking after the welfare of Nigerians, why are they not also talking about the economy tickets issued by the same airline? The Minister should know that those who sold the idea to her are fighting for their selfish interest and that the money they spend on most of the tickets is from government

purse. They are not the ones paying from their pocket. Even if they pay from their pockets, they just sneak out of the country and return in the morning. They are hurting because it is too expensive. What about the nation they are short changing by this act?

esides, there are alternatives. If BA becomes too expensive, other airlines that are cheaper in their offerings are there. There are Nigerians who now fly Emirates to London via Dubai; there are those who fly Air France to London via Paris, there are those who fly Lufthansa via Frankfurt. These airlines have cheaper first class and business class offers. If not for the simple reason they find it easier and convenient to sneak out of the country through BA, there are alternatives. If you are flying Emirate, you have opportunity to rest in a hotel free, before going to London. That is why today Emirate is having the crowd that it is having and its tickets are cheaper. There is also Qatar Airline; it all depends on how any Nigerian wants it. If you want to go six hours and come back the next day, fine. Many Nigerians have on their own stopped flying BA long time ago for the reasons the Minister has stated. The high ticket issue is a smoke screen for those who want a national carrier which many in the aviation industry have described as the pending fraud. Who are those pushing for a national carrier? Where is the infrastructure to run a national carrier? Is the federal government going to buy back the properties of Nigeria Airways sold for peanuts just some years back and from whom? How did the Minister come about the idea of a national carrier? Is somebody trying to push himself in that line because he thinks that he cannot survive the airline business and wants to sell his holding to government in order to turn his airline into a national carrier? At what price will the government buy back what it sold out? Is this another attempt to rip the nation off? Are these not the same people that connived to destroy the Nigerian Airways and bought its property for peanuts? Is it not a curious thing that no private individual was supposed to own any property within the airport and you can only rent or pay a ground rent, but the property of Nigeria Airways was sold for less than one billion to whoever wanted? Nigerians are watching how all of this will play out. C M Y K

20 — Vanguard, MONDAY, MAY 21, 2012

News BRIEFS Police crack US theft ring that sold luxury cars in Africa

uthorities on Wednesday broke up a n international car theft ring that used the streets of New York “as one giant showroom” to stalk more than $1 million in luxury cars and steal them for sale in Africa, the New York state attorney general said. Fourteen people were arrested in raids on an indictment that resulted from a yearlong investigation that used wiretaps. The stolen cars were loaded into containers and shipped for sale in Ghana, Senegal and Nigeria. Authorities said the ring looked for cars that matched orders placed by a theft broker, including model, year, color and accessory package. To “fill the order,” the “steal team” targeted a matching car on the street, used keys obtained from a locksmith to get inside and then employed a portable computer to synchronize the key to the car’s unique code, enabling a theft without damage, state Attorney General Eric Schneiderman said in a press release. “This criminal enterprise used the streets of New York City as one giant showroom for stealing cars,” Schneiderman said. The ring “left innocent New Yorkers in the lurch.” The ring specialized in stealing Lexus, Acura and other high-end automobiles.

Nigerian content: Addax to grow indigenous capacity

ddax Petroleum Development Corporation said it aims to grow indigenous capacity in the oil and gas sector such that it becomes the operator of choice in ensuring compliance and promoting a culture that harnesses local resources in Nigeria. The company also said that it intends to create value through successful exploration, development and production of oil and gas resources whilst contributing to the wealth of the nation and development of its host communities in partnership with the government and affiliate agencies. The Managing Director of Addax Petroleum, Mr. Cor nelius Zegelaar, made this known in a keynote address at Addax Petroleum Nigerian Content Day, saying, “our desire is to see our contractors and the future generation of Nigerians strategically developed into world class players. C M Y K

2011Tourism Man of the Year Award winner, Mrs. Obioma Liyel-Imoke.

whole country and this will become a quarterly figure.” In fact we will use the GDP that is generated to be able to tackle unemployment better. Right now there is so much talk about unemployment, but only recently that we are even beginning to really try to understand; what is the nature of this unemployment? What is the breakdown of it? What are the regional characteristics of it? Accordingly, Dr Usman disclosed that, there is now a change from the way Nigeria used to solve problems. The approach of throwing money or policies at problems in the search for solutions without even trying to understand the nature of the problem is over. “Government is now trying to understand the nature of this unemployment problem. The unemployment situation in Kano is different from that of Lagos. We need to understand such peculiarities as what are the age groups, what are the breakdown between men and women? What are the different employment opportunities that exist in each state?” The Minister, described unemployment situation as a problem in Nigeria, but pointed out that, the more data that you generate, the better you are able to tackle the problem by having specific targeted policies that are able to address unemployment.

FG computing statistics of unemployed Nigerians, says Usman By CHRIS OCHAY I

he Federal Government has embarked on thorough and comprehensive survey and data collections in order to determine the accurate level of unemployment statistics in each state of the federation. The Minister / Deputy Chairman of National Planning Commission, Dr Shamsuddeen Usman, said, “the National Bureau of Statistics, NBS, is in the middle of conducting a very detailed comprehensive survey on unemployment across the whole country and this will become a quarterly figure” The minister was responding to a question during a media chat with Journalists in Gombe, Gombe State Capital, North Eastern Nigeria, after a ceremonial flag- off of the States’ GDP Computation in the State. He said the kind of survey being worked out now by the government will correctly determine the level of unemployment statistics in each state that differentiates it with other.

According to him, “even within one state, what is the situation in Gombe state for instance, that differentiates it from other states? The National Bureau of Statistics is in the middle of conducting a very detailed comprehensive survey on unemployment across the

Buttressing his point f u r t h e r, D r Usman, gave an example of a recent

surveys conducted by the National Bureau of Statistics in conjunction with SMEDAN to estimate the total number of SMEs in the country. “Tentatively the work is still in progress, but it will interest you to know that, they indicated that they got a figure of 17 million SMEs.

CIPM declares uncertified HR practitioners illegal By PROVIDENCE OBUH

hartered Institute of P e r s o n n e l Management

(C IPM) has declared illegal any Human Resource (HR) officer operating in an organisation without certification from the institute. Speaking at the Induction ceremony of the institute in Lagos, last week, President of the Institute, Mr. Abiola Popoola said, “In realisation of ensuring that only qualified HR practitioners and CIPM members’ man HR portfolios, early last year, the Institute wrote its corporate members and some top organisations in that regard, seeking compliance. “In 3rd quarter of 2011, we also reinforced our advocacy on professionalism and essence through series of media announcement and paid public notice in the press, to the fact that CIPM is the body saddled with responsibility to regulate HR practice in the country and to the effect that, it is illegal for anybody, organisation or entities in all sectors of the economy to have in their employment, whether a Nigerian or an Expatriate HR practitioners that are not certified by CIPM to sit over HR matters. “We will as an Institute, continue to provide HR practitioners, a lifelong learning opportunities to enable them become fulfilled professionals, but we would also not hesitate to wield the big stick, should the need arise, when any of our members breach our code of conduct, which guides our behavior at our respective work place as true professionals. Structures have been put in place to ensure compliance and we urge members and stakeholders not to hesitate to report to us non-compliant members who engage in any misdemeanor or infraction that could bring HR practice to disrepute.”

Cross River declares 100% boost in tourism By EBELE ORAKPO

he First Lady of Cross River State, Mrs. Obioma Liyel-Imoke, has said that tourism is the key to the economic development of the state and its people. She made this known while receiving the 2011 Tourism Man of the Year award from Akwaaba and Abuja Bantaba at the Peregrino Hall, Government House Calabar. While thanking the organisers for the honour, Mrs. Liyel-Imoke noted that the tourism industry in the state, popularly called the nation’s paradise, has

witnessed remarkable growth largely due to the peace and hospitality of the people of the state. “This in itself has a direct impact on the livelihood of the people as one of the dividends of the industry,” she said, adding that Carnival Calabar, “which has come to be known as Africa’s biggest street party, has given Nigeria a place on the tourism map of the world as the number of tourists visiting during the time goes up each year.” She also stated that “the recent elevation of the Obudu Mountain Resort to the first position in the contest for the seven wonders of Nigeria, and

entering it into the Guinness Book of Records as having the longest cable car ride in Africa, are further contributions the state has made and still making in tourism development in Nigeria.” The first lady noted that infrastructure development in the state such as the Calabar International Convention Centre with a five-star hotel attached to it opening in 2013, a four-screen cinema to be opened next month at the Marina Resort amongst others, will further project the tourism potentials of the state.

Vanguard, MONDAY, MAY 21, 2012 — 21

News

LWI to partner business firms on increased health investment BY MICHAEL EBOH

lobal trade growth will

From left: Vice President, Chartered Institute of Personnel Management of Nigeria (CIPM), Mr. Sunday Korode; Guest Speaker/CEO Mac Tay Consulting, Mr.Tayo Rotimi; President/ Chairman of Council, Mr. Abiola Popoola, and Mr. Sunday Adeyemi, Registrar/CEO at the 12th Induction ceremony held last Thursday in Lagos

Bank Plc and May & Baker Nigeria Plc and the Lagos State Government among others. Bright explained that LWI will empower the executives of these organizations by ensuring that they take steps

towards attaining an equilibrium between work and life, by catering for their health and wellbeing. “What is needed is not only health insurance policy but also quality attention to their health’” she noted.

Continuing, she stated, “We discovered long ago that people generally indulge in unhealthy habits and they do nothing much about their health until there is an exigency or emergency.

We will continually empower women — Evelyn Urhobo By EBELE ORAKPO

mpower a woman and you have empowered the nation,’ so goes a saying. In line with this saying, and to ensure a better society for Nigerians, the President/Chief Executive Officer of Morgan Smart Development Foundation, Dr. Evelyn Omawumi Urhobo has said that her foundation will do its best to continually empower women to enable them impact the society positively. She said this during a fourday women community leaders training workshop held in Warri recently with the theme: Empowering Women to Empower their Communities. Employing the Adult Learning Model and Appreciative Inquiry Model participatory training methodology of the Centre for Development and Population Activities (CEDPA), a US-based organisation, the participants were made to participate directly in the learning process. Some of the topics handled include Proposal Writing, Fundraising, Financial Management, Banking and Banking Transactions, Book Keeping, Micro-

Global trade well below precrisis trend: survey

iveWell Initiative, LWI, a Non-Governmental Organisation, NGO, has expressed its readiness to partner and encourage financial institutions and other blue chip companies in Nigeria to increase their social sector investment and support for the health sector. Mrs. Bisi Bright, First Vice Chairman/Chief Executive, LWI, who said this at its Grand Health Bazaar, GHB 2012, in Lagos, also said it is committed to promoting worklife balance, workplace wellness, healthy living and health consciousness among Nigerians. She disclosed that it plans to partner with stakeholders in key sectors of the Nigerian economy to increase health awareness and promote access to healthcare in the country. An example of its commitment to healthcare development, she noted, is its Grand Health Bazaar GHB 2012, where it partnered the United States Consulate General, Skye Bank Plc, Pfizer Specialities, Central Bank of Nigeria, West African Health Organisation WAHO, Symbion Power, GlaxoSmithKline Consumer Plc, UTC Nigeria Plc, Nestle Plc, Stanbic IBTC

BRIEFS

credit, Communications, Advocacy, Wealth Creation, Group/Team development and Gender Mainstreaming within the context of the Millennium Development Goals. Speaking at the event which featured high caliber facilitators, the Delta State Commissioner for Women Affairs, Mrs. Betty Efekodha noted that in the last 50 years, women have contributed significantly to the growth of the economy and the country at large. The commissioner who was represented by a director in the ministry, Mrs. Onyekweli Fina, stated that the state government has been doing a lot to empower women via micro-credit, free healthcare for pregnant women, skills acquisition as well as adult education. She praised the efforts of Morgan Smart Development Foundation for their role in continually empowering women. She advised the participants to take the workshop very seriously. One of the facilitators, the Senior Programmes Officer, Communications and Advocacy, Morgan Smart Development Foundation, Mr. Michael Chidozie, explained that effective communication

is one that yields the desired result by the parties involved. According to him, “communication should involve listening, understanding, asking questions and giving feedbacks.” In her lecture on Leadership

Development, Dr. Urhobo defined leadership as an “ability to know the people, their needs, make the right decision, have the right contact and influence them for change.and local women NGOs.

African leaders, mayors set to tackle urbanisation BY PROVIDENCE OBUH

frican leaders and

mayors will this month converge for two days in Lagos to tackle issues of urbanization which has become the bane of the continent. The conference which comes up between May 30 and 31, will witness the attendance of about 150 senior level participants to debate challenging questions around managing, designing, and financing the continent’s cities and discuss the future of African’s urban transformation with international groups of experts. According to the organizers of the conference, “Urbanisation is happening

faster in Africa than anywhere else in the world and by 2050, about 60 percent of Africans will be city dwellers,” with the cities planned in haphazard, fragmented and characterized by lack of longterm strategic planning and incoherent investments.” The Conference Director, Marianne Mazou, in a statement on the conference said, “Urban development has been haphazard, fragmented and characterized by a lack of long-term strategic planning and incoherent investments. For Africa’s expanding cities to function in the future, policy makers need new and innovative approaches to urban development, infrastructure, environmental issues, transportation, social services and housing.

slow this year and volumes are unlikely to regain their pre-crisis trend for at least another four years, according to a survey released recently by International Chamber of Commerce ICC. It said it expected trade, the life blood of the global economy, to expand by 5.2 per cent this year and by 7.2 per cent in 2013. Growth for all of 2011 was 6.6 per cent, driven by emerging markets, but slowed down towards the end of the year. Euro zone export volumes fell 5.9 per cent in 2011. After the collapse of Lehman Brothers in September 2008, global trade suffered the steepest slump since the Great Depression of the 1930s as banks pulled in their horns. These financial problems have diminished but have not disappeared, the ICC warned. “Left unattended, they can still cause irreparable damage to the trade finance industry,” the report, based on a survey of 229 banks in 110 countries, said. Chief among bankers’ concerns is the scarcity of capital. Many European banks that were traditionally big suppliers of trade finance have quit the market or cut back sharply because of funding constraints and pressure to deleverage.

El Nino could cut global 2012/13 cocoa output: ICCO

ossible El Nino weather conditions later this year could exacerbate a potential global cocoa deficit in the coming 2012/13 season, causing prices to climb, the International Cocoa Organization (ICCO) said. “We know that when we have El Nino conditions it’s likely that this will impact negatively on world cocoa production. We would have less production and this would have an impact on price,” ICCO statistician Laurent Pipitone told Reuters. “If we are in a period when we have already a deficit, and in addition we have this factor that adds to the deficit, the impact on price would be even higher,” he added. El Nino the warming of the Pacific Ocean leading to a shift in weather patterns - caused a drop of 2.4 percent in world cocoa output on average when it occurred over the last 60 years, according to ICCO data. Such a drop equates to around 100,000 tonnes of cocoa at current production levels, Pipitone said. C M Y K

22 — Vanguard, MONDAY, MAY 21, 2012

Money Market BRIEFS World Bank supports South Sudan with $38m grant

outh Sudan received a US$38 million World Bank grant today to help rehabilitate feeder roads and increase access to rural communities in high agricultural potential areas. The grant will also help improve food security and local service delivery efforts in the vast country. The South Sudan Rural Roads Project grant was signed today by the Minister of Finance and Economic Planning, Hon. Kosti Manibe Ngai, and Laura Kullenberg, Country Manager for the World Bank in South Sudan. South Sudan only has a road network of about 17,000 km, of which only about 4,000 km are all weather roads. It thus faces a huge infrastructure deficit. Apart from helping to address this deficit, the grant aims to boost the local agriculture sector by upgrading and rehabilitating rural roads linking productive agricultural areas to market centers.

have descended, or is it forced, is unlikely to create the kind of inclusiveness that we seek. The few who are rich will get wealthier whilst the overwhelming majority of our fellow countrymen and women will, as data from the National Bureau of Statistics shows, continue to wallow in poverty. This can only be a prescription for divisiveness and erosion of our national integrity.” “Available data L-R: Chairman/Chief Executive Officer, Projofin Nigeria Limited, Rtd. Admiral Ochegomie Promise Fingesi, BankManaging Director/Chief Executive Officer, Mr. Ahmed Kuru, Proprietress/Chief Executive Officer, shows that in 2010, aggregate Bereton Academy Nigeria, Her Royal Majesty, Barrister (Mrs.) Josephine Diete-Spiff, Mr. Emeka Onwuka, the BankChairman and Mr. Ebenezer Foby, a Director of the bank at a recent Customer Forum of the bank, value-added of banks amounted to which held at Novotel Hotel, Port Harcourt, Rivers State…recently 1.21 per cent of total value, or Gross Domestic Product, created in the economy. In contrast, the valueadded created by the 20 most capitalised non-finance companies listed on the inclusion and poverty inclusion, adding that that is Nigerian Stock Exchange BY BABAJIDE KOMOLAFE reduction says Mr. Laoye why despite all the reforms in amounted to 1.86 per cent of & AHMED IBRAHIM Jaiyeola, immediate past the banking industry, banking GDP in 2010. If the ‘ real sector ’ firms are creating igeria should look president, Chartered Institute services have remained greater wealth than banks, beyond microfinance of Bankers of Nigeria (CIBN). limited to few people in the how do we justify the sharply “To facilitate inclusion, we country. institutions to higher difference in achieve the goal of financial may however have to look He said, “Let us be clear, the remuneration for staff and b e y o n d kind of lending into which we management of banks? microfinance, as studies in o t h e r countries have s h o w n , microfinance can help the unbanked have access to credit but it he problem of non- the bank and customer whose has been performing loans in business may even fold up in discovered the banking industry the process, even as the debt that the monies made can be traced to the problem remains hanging.” He gave examples of such available to of hidden and excessive them are charges by banks say Kenneth conflict involving clients for merely for Nwachineke a finance and which his firm worked in the recent past where “ we s u s t e n a n c e management consultant. discovered errors in Addressing journalists on and may not of the n e c e s s a r i l y Wednesday, Nwachineke, computation have an effect who is the Chief Executive administrative charges, which on bringing of Kenob-Lyn Nigeria was resolved amicably in them out of the Limited, said that going by favour of the customers.” Where a customer refuses to shackles of the engagements in resolving call a forensic auditor to check such issues between banks poverty ”, he said on and their customers, excess through their books and make charges could result from corrections, he said the error Friday. In a either faulty software, or would continue on that account, adding that where it v a l e d i c t o r y human errors. These, he continued, can is an overdraft facility, the s p e e c h delivered at cause distortions in the unpaid charges would also the 2012 billings, which when allowed attract further charges; just as Presidential continues unchecked and the size of facility granted Address of the snowball into substantial progressively reduces. It is not in all cases that the I n s t i t u t e , amount that would affect the which also business for which the facility banks are wrong, he admitted, recalling situations where marked the was taken. Explaining further, customers have gone to court end of his tenure as the Nwachineke, a forensic for excess charges, only to be President of auditor, said: “Before you take proved wrong by forensic the Institute, a bank loan, you make a investigation. While noting the huge nonJaiyeola said budget and then determine performing loans AMCON what you would require to that that the e x i s t i n g service the facility, but where and the banks have so far b a n k i n g there is excess charge, recovered and the N3.14 outstanding, practice in the whether deliberate or by trillion Nwachineke expressed accident, the fund can no c o u n t r y d o e s n ’ t longer meet the projections, concerns as to the quantum of e n c o u r a g e just as there would be no debt being challenged by the f i n a n c i a l money for servicing. These supposed debtors in courts. would lead to conflict between

Financial inclusion is beyond microfinance — Jaiyeola

Expert blames excessive charges for bad loans

C M Y K

Vanguard, MONDAY, MAY 21, 2012 — 23

24 — Vanguard, MONDAY, MAY 21, 2012

Money Market

MPC meets amidst sentiments against further monetary tightening

he Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) holds its bimonthly meeting today amidst rising sentiments against further tightening of money supply. The Committee meets to review the economy vis-a-vis the core mandate of the CBN, which is price stability and decide on necessary policy measures to influence money supply for the achievement of

this mandate. Last year, in order to curb inflation the MPC tightened money supply by raising its benchmark interest rate, the Monetary Policy Rate (MPR) six times from 6.25 per cent at the beginning of the year to 12 per cent in November. It also raised banks’ Cash Reserve Requirement (CRR) three times from 1.0 per cent to 8.0 per cent; and their liquidity ratio (LR) once from 25.0 per cent to 30.0 per cent. This resulted in steady increase in interest rate in the money markets from the region of six per cent to 15 per

cent. The Committee has met twice this year, in January and March, without adjusting the MPR, or adopting any measure to further tighten money supply. This was despite rise in inflation in March to 12.1 per cent. This trend, according to the National Bureau of Statistics (NBS) persisted in April as inflation rose to 12.9 per cent. The Committee in January said, “Staff estimates indicate that inflation in the first two quarters of 2012 would range between 11.0 per cent and 14.5 per cent, and then

moderate steadily towards the single digit zone by late 2013.” This could mean that the MPR might not be adjusted upward except rise in inflation exceeds these expectations. But going by the antecedents of last year, the MPC might adopt an attitude of ‘a stitch in time saves nine’, and decide to tighten money supply again. Adjusting the MPR upward to achieve this might be challenging for the Committee due to strong

By BABAJIDE KOMOLAFE

The Committee members however also need to begin to debate the extent to which the MPR should be increased if inflation continues to rise and do so above the expected levels

sentiments among economic operators against further tightening and increase in interest rates. The general mood against further upward adjustment of the MPR was captured by Bismarck Rewane, MD/CEO of FDC, in his Monthly presentations on the economy at the Lagos Business School. “CBN has very limited options. It cannot push rates up without hurting business”, he said at the April edition. The feeling of resentment among business owners against further monetary tightening was openly expressed by Shareholders at the annual general meeting of one of the banks last week. The Shareholders, notably, Mr Nonah Awoh and Chief Sunny Nwosu, President of Independent Shareholders Association of Nigeria (ISAN), complained against the cash reserve ratio of 8.0 per cent imposed on banks, saying that this is tantamount to tying down resources and discouraging investments. In fact Nonah Awoh did not just complained, he mandated the non-executive directors to

INTERBANK INTEREST RATES

the same sentiment in response to the March inflation figure. She said, “The current tight stance of policy should be sustained as there are evident inflation risks that should make the authorities cautious. This does not mean there is an argument for more tightening necessarily, just that with core inflation high, the current tight stance of monetary policy should be sustained.” Definitely there would be argument for or against further tightening of the money supply among the nine MPC members today. The Committee members however also need to begin to debate the extent to which the MPR should be increased if inflation continues to rise and do so above the expected levels. This is because with shareholders of banks complaining against high reserve requirements, and businesses crying out against high interest rates, it would be necessary to began to consider alternative policy measures to curb inflation other than jerking up the benchmark interest rate.

ACCA launches My Experience’ for accountancy students

new online system, My Experience, for students to record their practical work experience gained in the accountancy and finance industries has been launched by ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants. The new system takes over from the Trainee Development Matrix (TDM) and the Annual Return forms needed to pass the ACCA C M Y K

prevail on the CBN to relax its CRR and other mandatory deposits. That is why the expectation in the market is that MPC should allow the MPR and other monetary policy measures to remain as they are for now. Market operators said that since the April inflation figure is still within the expectation of the CBN, there is no need for further tightening now. “MPC is expected to remain neutral in May,” said Rewane in his outlook for the MPC meeting. Razia Khan, Regional Head of Research, Africa, Standard Chartered Bank expressed

Qualification. Oluwatoyin Ademola, country manager of ACCA Nigeria says: “An ACCAqualified accountant needs to pass exams, complete an ethics module, and they also need to show they possess relevant, practical work-based experience. This programme helps them to demonstrate to ACCA that they have applied their knowledge to the workplace and that they have practical as well as technical skills.

Vanguard, MONDAY, MAY 21, 2012 — 25

Capital Market sustained its existence after all its working capital and facilities were s u d d e n l y truncated. The shareholders were impressed with the boldness and determination to ensure that the c o m p a n y maintained its activities despite all odds. The Group M a n a g i n g Director, Engr. Florence Seriki, stated that this is the benefit of buying from first c l a s s manufacturers as the company ’s turnover was majorly from the From left: Mr. Nicolaas Vervelde, Managing Director, Chief Kolawole Jamodu, Chairman and Mr. Uaboi sale of another Agbebaku, Company Secretary/Legal Adviser at the 66th annual general meeting of Nigerian Breweries factory initiative – Plc in Lagos. Photo by Sylva Eleanya. the 24 hour Alternate Power Solution- a Hybrid solution with Solar, UPS and Inverters together with the new Omatek LED Bulbs that last 3 to 5 years without replacement. The importation of this was a Semi Knocked Down By PETER EGWUATU existing facilities. “Omatek and loyalty to its customers process as opposed to the Consumer scheme with many and the states consumer hareholders of Omatek states was a joint product with schemes were still sustained computers that are completely knocked down components Ventures Plc have their banker - Afribank and commended its Board this was cancelled suddenly. by Omatek despite these and raw materials. sudden challenges from “These were easier to fund of Directors for its effort in Their 10 year old mortgage Afribank; a tough situation and this is a clear cut evidence keeping the company afloat cancelled and the offshore and surviving the harsh and local Guarantee facilities after just been listed or going of the immense opportunity in public.” Omatek. If over a billion was operating environment that could not be sustained as the Shareholders claimed that equally done in this respect, prevailed during the last two bank had lost its offshore this is a phenomenom then with funding available, years. guarantee as well. The performance and rare the expected turnover of the The shareholders at the company has commitments situation for Omatek to have company is expected to sky combined Annual General rocket” she noted. Meeting (AGM) of the operating years ended, December 2010 and December 2011 said, “The management of Omatek Ventures has displayed unparallel zeal which has helped the company to survive and ready to get to the next level of its operations.” At the AGM, Group to reduce the company’s de- ability and enhanced shareBy MICHAEL EBOH Chairman of Omatek, Dr. pendence on imported sugar. holder value,” he said. Timothy Farinre, thanked all According to Dangote, DSR According to Dangote, shareholders immensely for hareholders of Dan DSR’s raw sugar importation is tmarket leader in the Nigetheir patience, support and gote Sugar Refinery and refining business has ex- rian sugar industry with about understanding of the peculiar Plc, DSR, has ap- perienced declining profita- 70 per cent market share and situation of the company in proved the company’s back- bility margin due to volatility the largest sugar refinery in the last three (3) years. He Sub-Sahara Africa with inexpressed his sincere ward integration strategies, in the prices of raw sugar in apologies for the delay in authorising it to acquire Sa- the global market and increas- stalled sugar refining capacivannah Sugar Company, ing competition in the local ty of 1.44 million metric conducting the two AGMs. tonnes per annum.. market. Result of the company ’s SSC. Speaking in the same He explained to the shareThe shareholders, who gave performance shows that shareholders funds grew from the approval at the company’s holders that part of strategies vein, the Director of the comN6,012,616 in 2009, to annual general meeting in to retain its position in the pany, Abdullahi Sule N6,449,331 in 2010, Lagos, said the acquisition market, the company had said clearvision of the compaindicating an increase of 7 per would help drive down the embarked on a number of ny was to grow local and incent. company’s cost, reduce its backward integration strate- ternational market. “Arrangement is currently The company’s net assets dependence on imported raw gies into domestic sugar proand the group’s net assets materials and improve its duction and milling business. under to expand “our export appreciated by seven per profitability. “The new strategy is in sup- horizon beyond Ghana. We cent, respectively. In his address to the share- port of the Federal Govern- are prospecting other counHe said that Omatek had to holders, Alhaji Aliko Dan- ment’s transformation agenda tries across the West African fund all its consumer schemes gote, Chairman, DSR, said and is ahead of the proposed Coast. Efforts are in top gear and all factory initiatives by currently SSC is 95 per cent sugar policy with the thrust of to ensure the refinery expanitself without any funding owned by Dangote Industries encouraging local production sion projects and the profrom any bank in the last three Limited (DIL), the core share- of sugar. strategy will signif- posed acquisition of Savanyears. Their banker – holder and was acquired from icantly reduce the company’s nah Sugar as part of our backAfribank, had expressed their ward integration projects are inability due to liquidation the Federal Government in cost structure while ensuring completed this year,” he said. that it remains competitive 2002 during the privatisation expected to fund many exercise as part of DIL plan and delivers improved profit-

Shareholders commend Omatek for surviving turbulent situation

Dangote Sugar’s backward integration strategies get shareholders’ approval

C M Y K

BRIEFS IOSCO, AMERC members sign regional MoU

he 37th annual conference of the International Organisation of Securities Commissions (IOSCO) was concluded last week, with panel discussions on market stability, development and integrity. The week also witnessed the signing of a Regional Memorandum of Understanding (MoU) by member-countries of the Africa/Middle East Regional Committee (AMERC) of the Organization. This is the first time that a regional MoU is being signed and highlights the importance that the AMERC region attaches to cooperation as a key response to the global financial crisis. At the signing ceremony, Chairman of the Board of the Securities and Exchange Commission (SEC) joined the Director General, Arunma Oteh, to sign the regional MoU on behalf of Nigeria. The regional MoU is intended to foster regulatory cooperation, capacity building, and information exchange within the region. The MoU further complements and reinforces the IOSCO MMoU and bilateral MoUs being entered into by securities markets regulators worldwide.

Carlyle in talks on $1.25bn Taiwan bank sale

rivate equity firm Carlyle Group is in talks to sell its stake in Taiwan’s Ta Chong Bank to Yuanta Financial (2885.TW) in a deal worth up to T$37 billion ($1.25 billion), two sources familiar with the situation said. Carlyle is exiting its fiveyear investment in the small and slow-growing Taiwanese bank in a share swap deal that will also give it a 7 percent stake in the fast-expanding Yuanta, owner of the island’s biggest brokerage. The equity firm and Ta Chong’s other major shareholder, the bank’s founding Chen family, would swap their combined holding of about 70 percent for Yuanta shares, the sources said on Friday, declining to be identified because the information is confidential. “Carlyle is shifting to Yuanta from Ta Chong because Yuanta has bigger potential.

26 —Vanguard, MONDAY, MAY 21, 2012

Capital Market BRIEFS Nestle to invest in promotion of sustainable healthcare

Business Impact CEO gets entrepreneurship award By CHINEDU IBEABUCHI

By CHINEDU IBEABUCHI & JOEL JOMBO

estle Nigerian Plc has reiterated its commitment to investing its resources to help fight under-nutrition and promote sustainable healthcare in Nigeria and across Africa. Mr. Samuel Adenekan, Corporate Communications and Public Affairs Manager, Nestlé Nigeria Plc, in a statement made available to Vanguard, said the company, through its multidisciplinary, educational organisation — Nestlé Nutrition Institute Africa, NNIA, is targeting a future where people across the African continent are living longer and healthier According to him, NNIA is dedicated to the science of nutrition for people of all ages, adding that the institute provides information, guidance and support to use the latest scientific discoveries and their application to achieving optimal nutrition. He said, “In a bid to combat infant and maternal mortality, NNIA, in collaboration with the University College Hospital, Ibadan recently organised a three-day Advanced Nutrition Programme for Anglophone countries. The theme of the programme ‘Maternal and infant nutrition: first 1000 days of life’ was discussed by a faculty comprising local and international speakers. “These included Prof James Renner, Lagos University Teaching Hospital; Prof Andrew Prentice, London School of Hygiene and Tropical Medicine; Prof Onike Rodrigues, Korle-bu Teaching Hospital, Accra; Professor Selina Okolo, Jos University Teaching Hospital; Professor Samuel Omokhodion, University College Hospital and Dr Chinyere Ezeaka, Lagos University Teaching Hospital. Over 50 health care professionals from leading paediatric care institutions were drawn from Nigeria, Ghana, Sierra Leone and Liberia attended the event held.” Adenekan further stated that at the seminar, issues such as human lactation, low birth weight, deficiencies, probiotics in nutrition, WHO Code directives and complementary feeding practices were discussed by the various facilitators. of the programme. C M Y K

Chairman, Central Securities Clearing Systems Limited (CSCS), Mr. Oscar Onyema (right) with Managing Director/Chief Executive Officer, Central Securities Clearing System (CSCS) of Mr. Abba Kyari at the 18th Annual General Meeting of the company held in Lagos.

Shareholders commend UBN Board for escaping nationalisation By PETER EGWUATU

hareholders of Union Bank Nigeria Plc have commended its Board of Directors for escaping the wrath of the Central Bank of Nigeria (CBN) over its plan to nationalize the bank. Speaking to Vanguard, President of Advancement for Rights of Nigerian Shareholders, Dr. Farouk Umar, who spoke the mind of other shareholders said, “We are happy that our bank was not nationalized, half bread is better than nothing. If the Board had not gone for core investors, the bank would have been taken over by government through Nigeria Deposit Insurance Corporation (NDIC). So we thank God we have escaped nationalisation, and it is our hope that the core investor will pick the failed portion of the rights issue while we hold our 10 per cent stake.” In his own reaction, Chairman of Progressive Shareholders Association of Nigeria (PSAN), Mr.Boniface Okezie, said, “I had predicted that the right issue will be a failure because the minority investors were short changed. The price it sold the rights was very high because we all know that Union Bank will not pay dividend in the nearest future. Even the right issue is not suppose to take place .I will like the issue of Union Bank to be revisited because the

CBN and Asset Management Corporation of Nigeria (AMCON) took over the bank unjustly. I just believe that there was nothing wrong with Union Bank. Let a new auditor be invited to look into the financials of the bank.” It should be noted that the failure of the rights issue is an indication that shareholders would get a refund of their money. The rights issue was supposed to fetch the bank N9.6 billion. However, failure of the rights issue, according to the shareholders’ does not in any way affect the bank’s recapitalisation as the core investors have injected funds

to take up 60 to 70 per cent of the bank’s shares. If the rights issue had been successful; the old shareholders’ stake would have increased to about 20 per cent from 10 per cent. But the status quo (failed rights issue) has paved way for the core investors to take up the unsubscribed portion of the rights issue that was supposed to be apportioned to the shareholders. The Bank as gathered currently has over N100billion shareholders’ fund. It will be recalled that the inability of the shareholders of the defunct Spring Bank (now Enterprise Bank), Afribank (now Mainstreet ) and BankPHB (now Keystone) to agree to hand over their banks to new investors necessitated the nationalization of these institutions – making them to lose out entirely.

anaging Director and CEO of Business Impact Limited, Mr. Samson Olatunde, 28 years, has received the prestigious International Youth Peace Ambassador Award for his great entrepreneurship skills. According to a statement announcing the award, the company said Olatunde officially received the award at the University of Lagos Edition of the Student Enterprise Summit, a gathering put together by him to inspire Nigerian students to discover and utilize their potentials to constantly aim at peak performance, and also to equip themselves for fitting career lines and cutting-edge entrepreneurship. The company said, “Olatunde, an expert in Internet Information marketing and several other internet business models, has over the years trained hundreds of Nigerians on how to set up legitimate internet businesses and thereby earn legal money online, a panacea to internet fraud which has painted Nigeria black among the league of Nations. “He has also written several books to educate Nigerians on business and financial intelligence, spoken in several business platforms including New Nigerian Youth Summit organized by Foundation for Socio– economic Change in Africa, the Youth Empowerment Summit put together by Mind Explorer Communications, and succeeded in organizing over 35 entrepreneurial empowerment programs. “In addition, he is the brain behind the Entrepreneur Platform Conference, the Business Growth Conference, the Entrepreneur Platform T.V show, Student Enterprise, and the Below 45 Entrepreneur Mentorship Forum.

Consolidated Breweries’ turnover hits N30bn ...Pays N3.25 per share dividend By PETER EGWUATU

onsolidated Breweries Plc has recorded a turnover of N27. 9 billion for the financial year ended December 31, 2011, representing a growth of 14 per cent from N24.5billion in 2010. The Chairman of Consolidated Breweries, Prof. (Mrs) Oyin Odutola-Olurin, who disclosed this at the company’s Annual General Meeting (AGM) in Lagos last week, said, “The Group

recorded a 15 per cent increase in turnover from N25.8billion in 2010 to N29.7billion last year. According to her, the profit after tax, declined with 18 per cent from N3.2billion in 2010 to N2.6billion in 2011, for the company and for the Group from N3.14billion in 2010 to N2.0billion in 2011, indicating a decrease of 37 per cent. She attributed the decline in the company ’s profit to stagnating volume growth and increasing operational costs occasioned by inclement operating environment in the country during the period

under review. ‘’We rely heavily on generators to power our Breweries and the attendant costs of operations always affect our profitability”, she said, adding that ‘’the country’s road network still needs a lot to be desired, resulting in frequent breakdown of our trucks and adding to the already high transportation cost”. Prof Odutola-Olurin noted with dismay that the partial removal of subsidy on fuel in January had further increased costs of running the company.

Capital Market Company

Opening Price (N)

Stock Market Report Closing Price (N)

Quantity Traded

Year High

Year Low

E.P.S.

P.E. Ratio

Oil and Gas and Products Petroleum Products Capital Oil Plc

0.50

205,000

1st fTier Securities AGRICULTURE Crop Production FTN Cocoa Processors Plc Okomu Oil Palm Plc Presco Plc

0.50 33.49 15.59

0.50 32.49 15.01

4,800 26,552 1,159,281

0.64 24.58 8.30

0.50 14.53 6.40

0.01 7.94 1.80

50.00 2.77 4.37

1.05

1.10

2,191,070

0.66

0.48

0.04

15.00

Livestock/Animal Specialities Livestock Feeds Plc CONGLOMERATES Diversified Industries A.G. Levents Nigeria Plc SCOA Nigeria Plc Transnational Corporation Chellarams Plc UACN Plc

1.12 5.52 0.67 6.43 34.98

1.07 5.52 0.73 6.43 36.00

63,000 100 14,954,500 1,000 1,079,007

2.54 8.28 1.82 7.60 42.50

1.45 5.52 0.50 6.43 28.70

0.28 0.35 0.22 0.31 7.03

5.18 15.77 3.64 20.74 4.14

CONSTRUCTION/REAL ESTATE Non-Building/Heavy Construction Julius Berger Nig Plc Roads Nigeria Plc

31.06 8.69

7,420 125

62.26 8.28

32.96 3.01

3.26 3.66

10.11 2.26

11.50

94,803

20.15

11.59

1.66

7.33

100.00

8.51

Real Estate Development UACN Property Development Real Estate Investment Trusts Skye Shelter Funds CONSUMER GOODS Automobile/Auto Parts DN Tyres & Rubber Plc Beverages-Brewers/Distillers Champion Breweries Plc Guinness Nigeria Plc International Breweries Plc Nigerian Brew Plc Premier Breweries Plc

12,000

0.50

0.00

5.05 0.50 0.93 19.95 1.40 0.65 8.59 3.50

5.05 0.50 0.85 20.00 1.44 0.62 8.59 3.50

168 240,000 858,700 49,670 1,627,401 50,576 10 100

5.31 1.45 3.20 29.65 5.61 1.96 12.91 200

5.31 0.70 0.83 23.11 3.61 0.95 0.95 4.28

0.06 0.00 0.27 2.58 0.21 0.08 0.00 0.00

88.50 0.00 3.07 8.88 9.05 14.13 0.00 0.00

ICT Computer Based Systems108 Courteville Investment Plc

0.50

100,000

0.52

0.50

0.05

10.00

Computers and Peripherals Omatek Ventures Plc

0.50

1,400,000

0.50

0.04

12.50

13.80 2.66

15,000 375

9.31 3.59

3.25 3.25

6.49 0.00

1.43 0.00

0.50

3,100

1.47

0.50

0.00

11.00 9.45 25.30 5.05 112.00 0.50 0.74 43.99 3.42 1.15 10.93

10.46 9.10 25.35 5.10 112.11 0.50 0.74 45.50 3.25 1.15 10.93

1,129,503 120,200 61,516 259,080 90,812 17 5,000 143,631 100,265 10,500 875

30.00 12.57 43.98 15.49 132.51 0.75 3.51 48.05 5.28 3.36 13.40

12.00 8.10 15.16 4.16 95.00 0.50 1.02 36.58 5.11 0.51 10.93

1.59 1.71 1.76 1.80 8.01 0.00 0.00 1.05 0.36 0.18 0.00

7.86 4.97 8.88 2.31 13.17 0.00 0.00 42.86 14.19 2.89 0.00

3.79 2.03

272,000 2,288,440

6.91 3.60

IT Services NCR (Nig) Plc Tripple Gee and Company Plc ICT Telecommunications Starcomms Plc

Quantity Traded

Year High

100.00

1,500

100.00

97.00

11.75

0.50

18,500

0.50

0.00

3.29 235.00 5.35 112.01 0.89

3.29 235.00 5.35 109.00 0.89

104,948 155,544 152,644 957,485 200

4.63

2.23

0.00

255.00 7.10 100.00 1.01

186.00 5.23 72.50 0.93

12.12 0.35 4.50 0.00

19.98 16.29 22.22 0.00

Packaging/Containers Avon Crowncaps & Container Nigerian Bags Manufacturing Company Tools and Machinery Nigerian Ropes Plc

8.26

100

8.69

8.26

NATURAL RESOURCES Chemicals BOC Gases Plc

1,000

9.20

6.80

41.70

10,510

51.49

39.00

3.70

13.92

6.95 3.90 61.37 2.25 6.00 0.50

6.93 3.80 60.11 2.14 6.30 0.50

3,081,974 9,125,216 142,023 279,000 2,903,940 9,814

19.90 16.20 95.00 6.60 6.70 0.88

4.31 4.02 57.00 2.31 3.80 0.50

0.54 0.71 4.50 0.26 0.73 0.06

16.91 14.38 16.89 16.92 5.75 8.83

16.00 425.00

344,784 324,989

29.20 470.00

10.17 367.83

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

11.68 36.19 3.34 2.88

11.10 36.19 3.30 2.88

358,924 247 164,042 800

15.58 42.66 6.75 3.67

12.71 36.19 4.78 2.66

Personal/Household Products PZ Cussons Nigeria Plc Unilever Nigeria Plc

23.20 30.00

23.00 30.51

443,075 254,205

43.50 31.25

27.00 22.56

1.29 1.32

FINANCIAL SERVICES Banking Access Bank Plc Afribank Nigeria Plc Bank PHB Plc Diamond Bank Nigeria Plc Ecobank TRANSNATIONAL INCORPORATION Fidelity Bank Plc FinBank Plc First Bank of Nig. Plc First City Monument Bank Plc Guaranty Trust Bank Plc NPF Micro-Finance Bank Plc Intercontinental Bank Plc Oceanic Bank International Plc Skye Bank Plc Spring Bank Plc Stanbic IBTC Bank Plc Sterling Bank Plc UBA Plc Union Bank Nig. Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc

6.78 0.64 0.57 2.88 11.40 1.33 0.50 10.75 4.75 16.21 1.07 0.70 1.15 3.25 0.88 6.30 1.20 3.81 4.30 0.54 0.50 14.69

6.85 0.64 0.55 2.75 11.08 1.32 0.50 10.51 4.52 15.90 1.07 0.70 1.15 3.20 0.88 6.28 1.28 4.00 4.09 0.54 0.50 14.85

4,970,579 646,608 146,538,502 14,572,690 4,215,879 17,648,249 1,000 27,982,164 10,157,371 22,549,964 500 73,200 91,000 8,172,794 1,006,032 2,342,648 508,696 48,808,682 163,183 11,112,613 17,766 36,315,959

11.10 3.39 2.30 9.27 4.30 3.20 9.50 16.12 8.30 20.50 1.78 1.78 13.50 10.17 2.18 11.38 2.91 11.70 5.38 1.92 1.75 16.70

4.26 0.64 0.53 2.05 1.65 1.20 0.00 7.95 3.60 11.64 0.00 0.87 0.00 3.90 0.73 6.30 0.95 2.17 1.96 0.50 0.52 11.45

0.80 0.00 0.00 0.00 0.28 0.22 0.00 1.34 0.69 1.61 0.00 0.18 0.00 0.85 0.50 0.54 0.22 0.13 7.59 0.11 1.34 1.57

Insurance Carriers, Brokers and Sector AIICO Insurance Plc Continental Reinsurance Plc African Alliance Insurance Cornerstone Insurance Comp Consolidated Hallmark Insurance Custodian and Allied Insurance Plc Equity Assurance Plc Goldlink Insurance Plc Great (Nig) Insurance Plc Guaranty Trust Assurance Plc Guinea Insurance Plc Intercontinental Wapic Insurance Plc International Energy Insurance Plc Investment and Allied Assurance LASACO Assurance Plc Law Union & Rock Insurance Plc Linkage Assurance Plc Mutual Benefits Assurance Plc NEM Insurance Co. (Nig) Ltd Niger Insurance Co. Plc OASIS Insurance Plc. Prestige Assurance Co. Plc Regency Alliance Insurance Sovereign Trust Insurance Staco Insurance Plc Standard Alliance Insurance UNIC Insurance Plc Universal Insurance Plc

0.50 0.78 0.50 0.50 0.50 1.70 0.50 0.55 0.50 1.57 0.50 0.54 0.50 0.50 0.50 0.52 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

0.50 0.73 0.50 0.50 0.50 1.76 0.50 0.55 0.50 1.59 0.50 0.54 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

8,178,336 92,000 5,000 206,584 30,200 3,931,627 800 87,500 500 500,171 30,146 100 96,166 1,670,890 9,663 287,200 142,673 20,000 59,800 10,000 1,900 1,421,674 13,750,000 81,750 10,000 130 5,167 150,000

1.06 1.20 0.50 0.50 0.50 3.51 0.50 0.69 0.50 0.95 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.90 0.50 2.50 0.50 0.50 0.50 0.50 0.50 0.50

0.50 0.85 0.50 0.50 0.50 2.00 0.50 0.50 0.50 0.95 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 1.90 0.50 0.50 0.50 0.50 0.50 0.50

0.09 0.10 0.00 0.00 0.06 0.43 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.02 0.06 0.10 0.00 0.10 0.36 0.01 0.01 0.14 0.03 0.07 0.00 0.00 0.00 0.00

5.56 10.20 0.00 0.00 8.33 4.88 0.00 0.00 0.00 17.25 0.00 0.00 0.00 25.00 8.33 5.00 0.00 5.00 1.39 50.00 50.00 6.43 16.67 7.14 0.00 0.00 0.00 0.00

Mortgage Carrier, Broker and Sector Aso Savings and Loans Plc Resort Savings & Loans Plc

0.50 0.50

500 1,250,000

0.50 0.50

0.00 0.00

0.50 2.02 0.50

7.77

0.50 2.02 0.50

7.77

27,500 25 3,827

660

0.61 2.02 0.66

10.54

0.50 2.02 0.50

9.52

0.28 15.94 3.90 1.61 0.70 0.00

0.00 0.00 0.03

0.00

37.57 27.96 3.26 22.48 7.34 0.00 20.93 20.46

5.83 0.00 0.00 0.00 25.91 6.68 0.00 6.96 6.20 8.74 0.00 5.44 0.00 5.07 5.44 14.81 4.68 19.23 0.28 4.82 0.43 7.83

0.00 0.00 16.67

0.00

3.98 1.99

5.94 1.47

0.15 0.19 0.00

39.60 9.16 0.00

6.00

Metals Aluminium Extrusion Ind Plc

10.60

12.39

10.70

0.13

85.77

Non-Metalic Mineral Mining Multiverse Plc

0.50

27,615

0.50

0.00

Paper/Forest Products Thomas Wyatt Nig. Plc

0.93

P.E Ratio

7.37

1.38

150

1.38

Processing Sysetms Chams Nigeria Plc

0.50

250,000

0.50

Electronic and Electrical Products C utix Plc Nigerian Wire & Cable Plc

1.45 0.50

700 4,000

2.50 2.58

1.62 2.58

1.44 0.50

2,000 1,000

1.51 0.99

1.33 0.50

0.05 0.00

28.80 0.00

3.98 12.71 13.28 4.30 1.05 2.92 0.63

3.98 12.71 13.28 4.30 1.05 2.78 0.6

6,888 1,000 100 29,198 200 84,311

3.98 15.58 15.03 4.30 1.86 2.92 0.63

3.98 12.71 13.97 3.60 1.05 2.92 0.63

0.00 3.90 0.00 1.22 0.17 0.07 0.00

0.00 3.26 0.00 3.52 6.18 41.71 0.00

Mortgage Carriers, Brokers and Se Abbey Building Society Plc Union Homes Savings and Loans INDUSTRIAL GOODS Packaging/Containers Abplast Products Plc Beta Glass Co. Plc Greif Nigeria Plc Nampak Nigeria Plc Poly Products (Nig) Plc Studio Press (Nig) Plc W.A. Glass Ind. Plc

0.00

0.13 0.00

0.00

13.15 0.00

OIL AND GAS Energy Equipment and Services Japaul Oil & Maritime Service

0.60

3,670,988

0.97

0.16

6.06

Intergrated Oil and Gas Services Oando Plc

17.30

16.71

2,192,473

78.97

27.99

6.95

4.17

20.50 0.50 25.46 3.07 11.34 132.90 36.50 138.95

20.50 0.50 25.46 3.24 11.34 132.90 36.50 138.95

82,191 1,000,000 2,737 186,002 39,516 45,982 13,126 62,031

37.10 0.70 32.60 5.59

0.50 0.50 5.71 3.89

4.93 0.00 6.02 0.67

7.40 0.00

163.50 2,100 240.00

141.00 63.86 195.50

13.32 3.32 11.91

11.11 19.23 17.07

00.50

0.50

2,000

600

0.50

50,039

0.72

1.97 1.36

240 1,972,073

4.33 3.65

1.97 1.30

0.00 0.16

2.65

0.54

Petroleum and Petroleum Products African Petroleum Plc Beco Petroleum Plc Conoil Eterna Oil and Gas Plc Forte Oil Nig Plc Mobil Oil Nigeria Plc MRS Oil Nigeria Plc Total Nigeria Plc Hospitality Tantalisers Plc

1.87

0.87

6.99

SERVICES

Afromedia Plc Automobile/Auto Part Retailers Incar Nig. Plc RT Briscoe Plc

1.97 1.24

Courier/Freight/Delivery Red Star Express Plc Employment Solutions C & I LEASING PLC

2.82

Hotels/Lodging Capital Hotel Ikeja Hotel Plc

6.78 1.10

0.50

2.83

251,888

3.67

0.50

1,700

1.64

6.78 1.10

100 873,000

400 2.07

0.51

0.90 3.00 1.33

0.04

0.08 0.22 0.69

12.75 0.00 8.19 4.91 11.25 34.09 2.12

Media/Entertainment Daar Communications Plc

0.50

1,000

0.50

0.48

0.00

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

1.90 2.80 4.20 3.65

1.90 2.80 4.20 3.75

1,000 25,180 4,322 87,373

3.68

3.17

0.26

12.19

8.00 6.82

4.60 3.60

0.00 0.13

0.00 27.69

Road Transportation Associated Bus Company Plc

0.50

1,000

0.80

0.50

0.00

Speciality Interlinked Technologies Plc

4.90

5.15

4.90

0.00

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

1.80 6.19

1.80 5.90

32,290 558,420

2.78 11.75

1.57 6.50

0.51 0.80

4.22 8.75

Vanguard, MONDAY, MAY 21, 2012 â&#x20AC;&#x201D; 27

16.48 430.00

HEALTHCARE Medical Supplies Morison Industries Plc Healthcare Providers

E.P.S

0.50

Pharmaceuticals Ekocorp Plc Evans Medical Plc Fidson Healthcare Plc Glaxo Smithkline Consumer Nig May & Baker Nigeria Plc Neimeth International Pharm Nigeria-German Chemicals Plc Pharma-Deko Plc

Closing Price N

0.50

Food Products Dangote Flour Mills Plc Dangote Sugar Refinery Plc Flour Mills Nigeria Plc Honeywell Flour Mill Plc National Salt Co. Nig Plc UTC Nigeria Plc

Other Financial Institutions Crusader (Nigeria) Plc Deap Capital Management & Trust Plc Royal Exchange Assurance

Year Low

0.50

Union Diagnostics & Clinicals Services

INDUSTRIAL GOODS Building Materials Ashaka Cement Plc Berger Paints Plc CAP Plc Cement Co. of Northern Nig. Plc Dangote Cement Plc First Aluminium Nigeria Plc DN Meyer Plc Lafarge WAPCO Plc Portland Paints & Products Nig Plc Paints & Coatings Manufacturers Premier Paints Plc

Beverages-Non-Alcoholic 7-UP Bottling Company Plc

Food Products-- Diversified Cadbury Nigeria Plc Nestle Nigeria Plc

Opening Price N

as at Friday, May 18, 2012

C M Y K

28 —Vanguard, MONDAY, MAY 21, 2012

Vanguard, MONDAY, MAY 21, 2012 — 29

Mortgage Finance

Ease of property registration: Nigeria ranks lowest in Africa

Amaokwe Estate in Umuahia

Stories by YINKA KOLAWOLE

igeria remains the most difficult country to register property in the whole of Africa, according to a report on Doing Business 2012 by the World Bank. The report ranked Nigeria 46 th out of the 46 countries profiled in the continent on the ease of registering property. Ghana is ranked number one as the easiest place to register property in Africa, followed by Sudan and Botswana. South Africa is ranked 10th in the continent. On the global level, out of the 183 countries surveyed in the report on the ease of property registration, Nigeria is ranked 180, r e m a i n i n g unchanged from 2011; Ghana 36; Sudan 41; Botswana 50; while South Africa is ranked 76 in the world. According to the report, the average time it takes to register property in sub-Saharan Africa is 65 days. In Ghana, it takes 34 days, Sudan 9 days, Botswana 16 days, while it takes 82

days to register property in Nigeria. In South Africa it takes 23 days. In sub-Saharan Africa, it takes an average of 6 procedures to complete property registration, in Ghana, 5 procedures; Sudan, 6 procedures; Botswana, 5 procedures; while in Nigeria; it takes 13 procedures to complete the registration. In South Africa, property registrationtakes 6 procedures. The report further stated that the cost of registration as a percentage of property value on the average for sub-Saharan Africa is 9.4 percent, while for Nigeria the cost is 20.8 percent of the property value. For Ghana, property registration costs a mere 0.7 percent of property value; Sudan 3.0 percent; Botswana 5.0 percent; while in South Africa, registration costs 5.6 percent of property value. The breakdown of the report on procedures, time and cost of registering property in

Nigeria is as follows: 1.Conduct a Property title search at the Land Registry, 1 day, N3,750 (search at Registry) plus Legal fees of N7,500–10,000 + 7.5% of values above N20,000 if acting for the buyer or 5% of values above N20,000 if acting for the seller; 2. Obtain Application Land Form 1C, 1 day, at no cost; 3. Obtain Certified True Copy (CTC) of title document, 2 days, N5625; 4. Obtain a Survey plan, 1 day, no cost; 5. Execution of Deed of Assignment/Conveyance and Land Form 1C, 1 day, no cost; 6. Payment of the Charting Fee, Administrative Fees, Endorsement fee at a designated bank, 1 day, Charting Fees (N7500) plus Administrative fees (N3000) and Endorsement Fees (N1500), Capital gains tax of 2% is also paid, but are not included in the calculation and; 7. Process Governor ’s consent to the Assignment, 61 days, at no cost. Others include: 8. Obtain notice of Stamp duty , Registration fees, Consent fees, Neighbourhood improvement charge at the Land Registr y, 7 days, no cost; 9. Payment of Stamp duty , Registration fees, Consent fees, Neighbourhood improvement charge at a commercial bank, 1 day, 8% Consent Fee plus 3% of property value for the registration fee plus 2% of property value for the Stamp

duty (Capital gains tax of 2% is also paid, but are not included in the calculation);

Oyo to issue C of O within 90 days

n a bid to attract real estate investors and boost housing development, the Oyo State government is set to issue Certificate of Occupancy (C of O) to applicants in the state within 90 days. Commissioner for Lands, Housing and Survey, Isaac Ajiboye Omodewu, who disclosed this at a press briefing on the activities of his ministr y, in Ibadan, said Governor Abiola Ajimobi gave the directive to encourage private sector participation in housing development. In addition, he said, application for mortgage is set for two weeks; sublease, two weeks; Deed of Assignment, one week and Registration Deeds, two weeks. “The state government has decided to remove the encumbrances associated with the issuance of C of O,” he said, adding that the

move was aimed to generate more revenue, and ensure that local and foreign investors willing to invest in the state have easy access to land. Omodewu reminded holders of statutory Right of Occupancies of private and state lands not to renege on agreement reached with the state government, by paying their annual ground rents promptly. He warned that failure to comply will attract imposition of penalties or instituting legal action against defaulters, adding that it may also lead to sealing off premises. “The holders of Statutory Right of Occupancy on state lands, especially on Kolapo Ishola GRA, should develop their properties to habitable condition within two years or have their interests revoked,” he stated. In a related development, the commissioner disclosed that the state government and a private developer, KFS Consulting, have sealed a public private partnership (PPP) arrangement to build 624 housing units at Km 22 Estate, Iwo Road, in Ibadan, the state capital.

30 — Vanguard, MONDAY, MAY 21, 2012

Mortgage Finance BRIEFS Structural engineers move against quacks

tructural engineers,

under the aegis of the Nigerian Institution of Structural Engineers (NIStructE), have commenced moves to checkmate activities of quacks in the profession. To this end, they have began a sensitisation programme on the need to engage qualified structural engineers for designing all structural jobs and, or contracts. The institution is also concluded arrangement to publish names of registered structural engineers twice in a year in national dailies. President of NIStructE, Mr. Busola Awojobi, said during his investiture recently in Lagos, that the measures will go a long way in curbing the incessant cases of building collapse in the country. He said the first batch of the list of registered structural engineers would be published later this month, while the others would be published in September. Awojobi said more efforts would be made to project the profession to the populace so as to avoid engaging quacks, thereby losing money, materials and time. “Vigorous sensitisation of young and old on the relevance of the profession especially on collapse of buildings will be carried out,” he added.

Lagos seals distressed buildings

n its quest to curb the spate of building collapse in Lagos, the state government recently sealed eight distressed buildings in Orile Iganmu and Coker in Coker-Aguda Local Council Development Area (LCDA). According to Lagos State Physical Planning Per mit Authority (L ASPPPA), the eight structures on Olufon Close, off Memudu Street, Orile Iganmu were built on 1,200 square metres, consisting three 2-storey buildings; two 3-floor buildings; a 4-storey building, a 5-floor building and a 4-floor structure under construction. The buildings were earlier identified as distressed in 2011 survey by the defunct Lagos State Physical Planning and Development Authority (LASPPPDA) and the owner was requested to conduct structural test on the buildings but instead he added an additional floor Director of Physical Development and Stage Certification, LASPPPA, Mr. Durojaiye Rufai, who led the team, said the development was to avert a looming disaster. C M Y K

Abia unfolds roadmap for housing development Stories by YINKA KOLAWOLE

bia State government has unfolded plans to ensure development of houses across the state and indicated readiness to partner with credible private investors. Special Assistant to Abia State Governor on Housing, Mr. Nwabueze Owuneme, who disclosed this, said special consideration would be given to property investors with proven track record, adding that property market in the state is vibrant with effective demand. He assured that whatever structure investors developed would be easily mopped up. “The 48 detached and semi-detached homes in Amaokpe estate (Adelabu estate) by NITEL sold for about N15.5 million and were over-subscribed. We got over 300 applications from people willing to pay outright. It was a good buy if you check the cost of the building and that of the land,” he said. Owuneme said that government was talking with a firm to build solid three bedroom houses that would be sold for not more than N5 million with all the modern facilities, explaining that there is a ready market. “In other parts of the world, housing is not left to the government. That is why as we are acquiring our land and building, if any investor is willing and ready they can come in and build, even if it is just 50 housing units in the first instance.” He said the government’s housing initiative would be directed at civil and public servants, as first-line recipients and that they would be encouraged to take out mortgage facility to enable them purchase these homes. “We are targeting civil servants and other people living in Abia to buy and we want to make it easy for them. If you are qualified to get a mortgage and as long as you are an Abian and even if you are not an Abian. It is not a cash and carry thing. There are 30 housing units being constructed on the site which is prepared to hold 200 housing units for low income earners.” According to him, the state government is keen at working with only private developers with integrity, noting that the first developer engaged in housing development by the present administration performed below expectation. “The first thing His Excellency did was to carry out a human capital development census of

Middle income housing estate in New Umuahia housing deficit in Abia State and it came up the fact that we have to build 300,000 housing units for the people. The first private developer to partner with the government did not take the buildings up to DPC level and the government had to employ direct labour to complete them. If Public, Private Partnerships (PPPs) were working for us, then by now

we would have built over a thousand housing units. We still intend to achieve this feat but the governor said we will not build houses for the sake of it but that as we build, people would inhabit them,” he stated. Owuneme said the estates the government is developing as well as those to be built by any investor would have excellent infrastructure,

including access roads, water and electricity from the state’s independent power project. He said the new Umuahia City, located about five or seven minutes’ drive from the city centre is also being upgraded into a modern community complete with a master-design that would include sophisticated malls, recreational parks, and housing estates.

MBAN opposes scrapping of NHF, seeks review

perators of primary mortgage banks (PMBs) in Nigeria, under the aegis of Mortgage Banking Association of Nigeria (MBAN), have opposed a call to scrap the National Housing Fund (NHF) scheme due to its apparent inefficiency at facilitating the provision of affordable housing to Nigerians. In a letter to the Minister of Lands, Housing and Urban Development, Ms. Ama Pepple, MBAN is rather advocating for re-engineering of the scheme to deliver faster benefits to contributors and beneficiaries as well as reducing processing time from submission of applications to disbursement to about 120 days. The mortgage bankers wrote the letter in response to the reported plan to scrap the NHF scheme, purportedly made by the Minister for Labour and Productivity at a

meeting with the Joint National Public Service Negotiation Council. They noted that the scheme cannot be scrapped without the approval of the Federal Executive Council, through an Executive Bill to the National Assembly to that effect because, according to them, the NHF Scheme is an Act of the National Assembly. MBAN noted in the letter that the purported plan to scrap the scheme has generated a lot of anxiety with the PMBs already inundated with calls from the depositorpublic on the situation. “We are quite aware of, and are willing to support all meaningful steps to restructure and re-invigorate the NHF scheme to achieve its long term objectives and goal of providing affordable housing to Nigerians,” it stated. The mortgage bankers in the letter jointly signed by its

President, Mr. Abimbola Olayinka and Executive Secretary, Mr. K ayode Omotoso recalled: “This same scenario reared its ugly head in the 1990’s before the advent of democracy, when labour agitated for scrapping of the scheme. However, when the democratically elected government of President Olusegun Obasanjo took over in 1999, noble steps were taken by the Presidential Technical Committee on Housing and Urban Development, under the Chairmanship of Prof Akin Mabogunje, which made passionate appeal to labour and put in place the restructuring of the scheme.” This latest development is coming against the backdrop of a World Bank report on Financial Services Sector (FSS) 2020 on the mortgage and housing finance sector in Nigeria, which noted that the NHF scheme is an inefficient and regressive model for allocation of resources; recommending that it either be abolished or intensively reformed.

Vanguard, MONDAY, MAY 21, 2012 — 31

Talking Insurance

Insurance

WITH

YnikaBoa lrniwa Reforms and the insurance industry (2)

ANY people do not insure their homes built with millions of naira, and in the case of the businessmen among them, the business premises are largely uninsured. It thus became important to further help the industry, which is why the industry regulator, National Insurance Commission introduced the Market Development and Restructuring Initiative. According to NAICOM, “the MDRI project is a medium term plan (2009-2012) of installing the first phase of the necessary reforms in the areas of industry capacity, market efficiency and consumer protection in the Nigerian insurance market. It would deepen and grow the insurance market and move the industry gross premium form N164billion (2008) to I.0 trillion 2012. Benefits of the Project At the end of the plan period (2012) the following benefits are expected to be achieved by the Insurance market: Increase in industry gross premium from N164.50billion (2008) to N1.0trillion by 2012; direct project revenue of N800.0m to NAICOM from implementing the project; Indirect project revenue to NAICOM from increase in ISS levy to N12 billion; revenue to Fire Service by way of fire service maintenance fund; creation of about 250,000 jobs in the insurance industry; lowering of insurance gap from 94% to 70%; increase in insurance contribution to GDP from 0.72%to over 4%; and building consumer trust and confidence in the Nigerian insurance Market

To further help the industry, NAICOM introduced the Market Development and Restructuring Initiative (MDRI)

Key areas MDRI focuses four (4) key issues: a) Enforcement of compulsory insurance products; b) Sanitization and modernization of insurance agency system; c) Wiping out of fake insurance institutions; and d) Introduction of risk-based supervision

Compulsory insurance products i) Enforcement of Compulsory Insurance Products in Nigeria — There are six insurance products made compulsory by law by the Insurance Act 2003 and other legislations and NAICOM intends to enforce these products. They are: Group life Insurance in line with the Pencom Act 2004; Employers liability in line with the Workmen’s Compensation Act 1987; Buildings under constructionsection 64 of the Insurance Act 2003; Occupiers liability insurance –section 65 of the Insurance Act 2003; Motor Third party Insurance –section 68of the Insurance Act 2003; and Health care Professional indemnity insurance under section 45 of the NHIS Act 1999 ii) Sanitization and modernization of Insurance Agency System The introduction of the Network Agency system which would expand the insurance penetration and provide employment to thousands of Nigerians. iii) Wiping out of fake insurance institutions The setting up of enforcement teams in all the 36 states of the federation to monitor compliance with the compulsory insurances. The teams would comprise of the Police, VIO, FRSC, Fire Service, Planning authorities,CORBON,NIA,NCRIB etc.The teams have been constituted and are ready to take off. iv) Introduction of Risk Based supervision The movement from compliance based supervision to risk based supervision is the way to go in order to reduce stress and distress from the system.

R-L: President of the Nigerian Council of Registered Insurance Brokers, NCRIB, Barrister Laide Osijo; Deputy President, Mr. Ayodapo Shoderu and Vice President, Mr. Kayode Okunoren at the month of May presidential forum held by the Lagos Area Committee of the NCRIB.

Insurers decry diminishing trust in insurance Stories by ROSEMARY ONUOHA

nsurance operators have decried the low level of trust on the sector from the public saying that such attitude is crippling the growth of the industry in the country. According to Managing Director of FBN Life Assurance Plc, Mr. Val Ojumah insurance is based on trust but the abuse of trust by insurers resulted in the poor public perception which is adversely affecting the sector. Ojumah said “When insurance started in this country, it was based on one keyword, ‘trust’ but that trust

was abused. In the early days when insurance agents with motorcycles were going all over the place marketing insurance and people parted with a lot of money. But did the early companies pay claims as they promised? The answer is no. Not a few agents went away with the money they collected and what happened? Many of those insurance companies went down. Consequently, that created a snowball and a big problem for the insurance industry. People w ill not forget in a hurry what

Custodian & Allied grows PAT by 123% in Q1 big vision and will execute it

ustodian & Allied Insurance Plc has posted a profit after tax of N770.885 million for the first quarter ended March 31, 2012. The figure represents a 123.7per cent increase from N344.589 million recorded in the corresponding period of 2011. According to the unaudited result of the company released by the Nigerian Stock Exchange, NSE, last week, gross premium income for the current year stood at N3.547 billion in contrast to N3.068 billion recorded the previous year to represent an increase of 15.6 per cent. Net assets closed the period at N13.153 billion as against N12.381 billion recorded the preceding year which shows an increase of 6.2 per cent. Managing Director of the company, Mr. Wole Oshin, said that the ambition of the management is to lead the market not only in Nigeria but in Africa, adding that they have a very

step by step. According to Oshin, Custodian & Allied is setting up systems and structures that will outlive the present management team and become institutionalised in the country. Oshin said “For us at Custodian we believe very much in systems and corporate governance, we are not there yet but we are trying to get there. We are pursuing the institutionalisation of the company and that simply means a company that will outlive all of us and to do that we need a strong foundation. We need rules, processes, people and we need to be very focused.” Oshin said that they spend a lot of time establishing systems and structures so that whoever is in charge at any time will run the structure.

happened in the past.” Other challenges which the insurance sector is battling with, according to Ojumah, is that insurance is still alien to Nigerians coupled with the fact that practitioners have not been innovative enough in creating new products. He said “In our traditional way of life, insurance is not a primary security. As a family member when something goes wrong with any individual family member, we do not look at insurance. As a traditional African family we contribute to help our member. So insurance is still alien to our way of life.” On the lack of innovation in regards to new product development, Ojumah said “On the parts of practitioners today our products have not been particularly innovative. Our administrations of insurance companies have not been particularly interesting. Claims administration process is still a problem in this market. Yes they will pay eventually but as they said justice delayed is justice denied.” Ojumah called for a change of attitude on the part of practitioners adding “If we need to grow this business there are things we need to do as operators and there are things we need to do as regulators.” He said “Not many people are prepared to put their money into life insurance companies and wait for one, two, three, four, five years before they get the return. How many people in Nigeria will prefer to do that? That is why FBN Life is institutionalised and not individualised.”

C M Y K

32 — Vanguard, MONDAY, MAY 21, 2012

Interview

Last week, former Nigeria Airways pilot, Capt. Tito Omaghomi, was in Vanguard to bare his mind on developments in the nation’s aviation sector. He spoke on issues ranging from Nigeria’s quest for a new national carrier, airfare disparity, airport remodeling across the country, to aviation security. Excerpts:

BY KENNETH EHIGIATOR

As far as the NCAA is concerned, we must have a man who helped us to get this Category One and somebody should maintain this, otherwise, there is no guarantee that once you have a Category One, it cannot be revoked

On compromises I do not know how, but in Ghana where they have a stable operation, I do not think anybody will go and ask or say ‘give me or my family free tickets.’ There is a law for it; everybody pays for his tickets. I have just told you the reason these people must recoup their money and the bigger problem we have is that we have compromised; we have sold our airlines but I want to alert this house that the biggest fraud in the aviation industry is on its way coming.

On assessment of current developments in the aviation industry in the country

e are moving in the right direction in the sense that the new Aviation Minister, that is the lady that was appointed Minister of Aviation, when she was appointed, there was this hue and cry about somebody not being an aviator being appointed as a Minister of Aviation and I was in this house, I told them, the unions that were saying that for somebody to be an aviation minister, he/she must be a professional, that there is no law that says that. I gave them an example. Our colleagues who were aviators, Air Force aviators, civilian aviators; who were appointed ministers of aviation did not do a thing in the industry. From what I have seen so far, this woman has taken the bull by the horn, she is upturning everything that has been done wrong in the industry. Very soon, I know that they will be calling for her head that she should be removed. I am not speaking for her; I am speaking for the generality of Nigerians and for the safety of the aviation industry. From appointments in the industry that I have noticed, the appointment she made in the different parastatals, for example, the Director General of NCAA whose tenure expired and it was renewed. I remember the last time that I was here; I told them that we should work hard to maintain our Category One status in the aviation industry. As far as the NCAA is concerned, we must have a man who helped us to get this Category One and somebody should maintain this, otherwise, there is no guarantee that once you have a Category One certification, it cannot be revoked. So, Dr. Demuren was asked to continue; that was in good faith. I remember in the early 60s, 1962 to be precise, when my old man was the collector of customs at the long room, government asked him to continue on contract for two years after he had retired. He did it and they asked him to continue for another two years but he said it was ok. This is the situation that we have found ourselves in the aviation industry. Then, talking about what is going on today, I was the one who coined the word cutting corners in the aviation industry during our interaction with the former President, Chief C M Y K

that will say to the President, ‘call your minister to order, leave this people alone’ that is the truth. British Airways gives Ex-chiefs some slots to and fro London. So, five out of the 20 seats are free tickets. Where will they get their money from? They must take it out from the other passengers. That is the problem that was on ground before the minister came in and they are shouting First Class is high.

P Capt. Tito Omaghomi

Olusegun Obasanjo, in Abuja when Nigerian planes were falling off the skies. I predicted that planes will continue to fall as long as people were cutting corners in the aviation industry. Today, you can quote me anywhere, operators are becoming very few, we know that pilots are given instructions, ‘if you have a snag in an aeroplane, do not put it on your technical logbook, write it on a piece of paper, when you land, give it to the engineer.’ What it means is that if the engineer is able to fix your snag, good; if he is unable to fix your snag, the aeroplane will go into service because there will be no evidence in the check log. As you know, the check log is the book anybody will go to and you know what happened. No engineer that knows his onions will sign an aircraft off that this aircraft has an hydraulic leak, ‘I have repaired it, it is good to go.’ No engineer will put his hand in such a check log, so to cut another way of passing them, write it on a piece of paper, give it to the engineer, this we have discovered. I have raised this alarm, we are becoming very cautious, the operators are becoming very cautious, and this is why we are having fewer accidents now. Two, when we talk about the airports, at this time, there is a lot of renovation work going on in our airports, they want to give them a facelift and stakeholders are complaining that the Minister has refused to carry them along; I do not know whether all of them are contractors that the Minister will take everybody along. All of us here are stakeholders in

the aviation industry, if the Minister wants to repair a toilet at the Murtala Muhammed Airport, I do not see why anybody should be annoyed that she does not take all of us along with her. This is the grouse that people have with the Minister of Aviation when it comes to taking everybody along in the aviation industry. Seminars are held here and there and everybody is free to attend. Now, let us go to the crux of the matter, BASA, British Airways, Virgin Atlantic. Although these matters are in court and in the National Assembly, I have to remind Nigerians that nobody put a gun over our heads when we were signing all these agreements. The Minister has discovered the lopsidedness in these agreements. This is why she is taking the actions she has taken because nobody had been bold enough to take such actions before now. Between us and British Airways, I know in the aviation industry, you know there is what they call complementary tickets, so when British Airways brings its aircraft here, they have 20 seats on the First Class, and it will give five of those seats to our big shots as complimentary, free of charge. They have to add all these money on the other seats. So we are shouting that First Class is high; economy is the same anywhere in the world, Ghana, everywhere; it is the First Class that is the problem but they forget that these people give complimentary tickets. I do not want to mention names but they give complimentary tickets to big shots and it is these big shots

eople that bought Nigerian Airways, its

Capt. Tito Omaghomi...they give that will come and say number on

Nobody put a we were signi hangers, and everything, now know that government is desperate to set up an airline. Everything they bought for peanut, they will now resell to me and you in dollars, because they are failing in operating their airline, they are looking for whom to hand this airline off to and this country says ‘we need an airline, we must get an airline desperately.’ That is what is the move going on now. Very soon, you will hear that government must set up an airline within two years. Where will the government get the needed infrastructure to operate a national carrier from? It is Nigerians' properties that they have stolen that will be used to achieve this purpose and that is why we are pained. I am pained when I hear the former President saying that he left 32 aeroplanes for Nigeria Airways. I came back, there was no aeroplane left. That is a statement people will come out and refute and defend because I know that the 32 aeroplanes that he left, the federal government gave 7 to Air Force. When the F28 had an accident in Enugu, government directed Umaru Dikko to sell eight F-28. The eight F-28 were sold to Ghaddafi. When Group Captain Banfa failed to bring Umaru Dikko back to this country in a crate and came back, he got a compensation job as MD in Nigerian Airways, he sold two 727 brand new planes. So what

are we talking about? Nigeria Airways DC-10 went to train in Ilorin, it landed and caught fire and was burnt to ashes; three Nigeria Airways Airbus at that time went for maintenance and were seized. So what are we talking about? Somebody leaving us with 32 aeroplanes and now he says he cannot reinforce failure, which was the reason of the former President for not reinforcing Nigerian Airways. I cannot reinforce failure, ladies and gentlemen, which corporation failed more than the railways in this country that they are still reinforcing up till tomorrow. They are still reinforcing NEPA also. They reinforced the rail because all their houses are on the railway track from Lagos to Zungeru, small, small cubicles, they have nothing to sell in the railways. Nigerian Airways was the greatest landlord in GRA, you know that all its properties in London, in the US, Abidjan and Accra, were sold in order to liquidate Nigerian Airways. They bought all these properties, but we all know that the charter that set up Nigerian Airways was an Act of parliament. Who can undo what parliament has done without recourse to parliament? No, one man sold this country’s airlines. Read the charter that set up Nigerian Airways, Nigerian Airways was set up for national prestige, that was why we will go from Lagos to Kano, full load, Kano to Maiduguri half load, Maiduguri to Yola, one passenger, they said we must go there. An aircraft is going to London with 250 people on board gets to Kano, they say, ‘off load all your passengers, somebody is going to Saudi Arabia’ all passengers are off loaded, they carry

Vanguard, MONDAY, MAY 21, 2012 — 33

Interview

If you go into the history of Murtala Mohammed International Airport, you will discover that underground is where the chillers are, all the air conditioners cooling systems are underground

complimentary tickets to big shots and it is these big shots ne

to come and do the turn around maintenance. That is what they will do. If you do not make an emergency cooling arrangement, government will now have to look for the contractors that built the airport, that installed the facilities to carry out the repairs. Look at the central air condition, all they do now is mount standing air conditioners in the departure and arrival halls because they do not know the history of that airport, that is the truth. On what can be done to improve the present situation as the airports undergo remodeling, especially MMIA Since we have this emergency situation on ground, it will take us time re-furbishing, and re doing everything again. On the ugly nature of the

about it; may be after this interview, if this issue is highlighted, the Minister will take note. But that road belongs to the Airports Authority. On fears that the airport in Ghana will take the shine off the MMIA, Lagos, as the hub of aviation in West Africa Let me tell you something, it is not the infrastructure you have in an airport, the big buildings that make a good airport. If you are taking off from London to Lagos, you file a flight plan; they will ask you ‘what is your alternate airport, just in case your destination airport is not good, where will you go to in such an event.’ 90 percent of airlines choose Cotonou. Cotonou is a small airport but their facilities to aid an aeroplane land are world class.

gun over our heads when ing agreements

On complaints by operators that the Minister of Aviation ordered airports re-modeling without alternative arrangement for stakeholders, including passengers The operators and stakeholders as far

one person and his entourage to Saudi Arabia and the aeroplane stays there for five days, who failed? You come back to say we failed. Every government officials that has traveled in Nigeria Airways in this country traveled for free; they did not pay, and Nigeria set up that airline for national prestige. You will feel good when you are in Heathrow Airport, and you see an airline landing with Green, White and Green. As a Nigerian, you feel good, whether they are making money or not, you feel good, this is what this airline was set up for. The airline was not set up to make profit. They even went ahead to sell this airline and now we are paying for it. We don’t have an airline, if we had an airline and British Airways say ‘pay N150 for First Class’ Nigerian Airways will say pay N75, everybody will go there. We have nowhere to go to, so this knocking hand on the chest, ‘I am going to ban this; I am going to ban that’ I don’t want to comment on that, that is the problem. On why there is high taxes on air tickets, as Air Nigeria begins flight operations to London on only $299, which is just about N50,000 but taxes are about N80,000 I cannot comment on that. I am not in the marketing division so I don’t know how they work out their figures. So, I cannot comment on that.

Everybody wants to go there but we should take into cognisance, what are the new security measures in our airports? People who want to come in with their illegal loots prefer to go to Accra now because they have leverage in entering there. What is our security doing differently? They are arresting people by their numbers. So people like to divert. It is a combination of everything. So it is not because these airports here are so bad; it is because the security situation is becoming tougher and tougher for arrivals and that is why some of them are sneaking right and centre now. That is the truth. Is that good for the country? It is good for the country when it comes to security. It is good for the country! If I am bringing in one tonne of cocaine from Malaysia to Lagos and I hear that the security here is very tough, I divert my loots to somewhere else. So that is the truth. It is not everybody that does not want to come to Lagos airport think the airport is bad; it is because of the security situations too. So that is the c a s e . On concerns over airport development by virtually all states of the federation,

Somebody leaving us with 32 aeroplanes and now he says he cannot reinforce failure, which was the reason of the former President for not reinforcing Nigerian Airways

as I know said the Minister did not carry them along in the ongoing re-modeling work. Operators do not own airports; they only do their businesses there. Those airports are owned by government. FAAN is the landlord of the airport. If the Minister says ‘MD what and what do you need here, what and what do we do there, this place is hot, no air conditioning, our toilets are not working,’make estimate for their repairs. Why do we need operators to follow them to do the repair? If they are contractors, they should say so. The Minister has no business taking them along in this matter. That is the truth. See, if you go into the history of Murtala Mohammed International Airport, you will discover that underground is where the chillers are, all the air conditioners' cooling systems are underground. Repairing them is like you are now going to look for the people that built our refineries

road that links the international airport to other parts of Lagos, especially, as the road does not befit the status of the airport as country ’s window to the airport.

am happy that you have observed that. I used to be a member of the board of Nigerian Airports Authority. I do not think that the Minister has been well advised. That stretch of road that you are seeing there belongs to the airports authority. That stretch of road is the responsibility of the Nigerian Airports Authority and because of those squattersbanks, mechanic workshopsthey have neglected that road. I wish somebody will draw the attention of the minister to it. The road leading to the Murtala Muhammed Airport is the property and responsibility of FAAN and they used to tell squarters along that strech of road, ‘if you build any house , we shall demolish them.’ Nobody is doing anything

Capt. Tito Omaghomi We believe that whatever weather affects Lagos affects that same Cotonou 15 minutes flight time. Once you take-off, you just go up a little, before you get up to 5,000 feet, you are seeing the airport, but everybody wants to go there because facilities at the Nigeria airports are failing whatever they are doing now. I have not flown for sometime, but I know we have the Total Radar Coverage (TRACON) which makes the airspace to be safer. I don’t know if the ILS facilities are working well. I will have to check. However when it comes to comfort of passengers at the airport, this is the same thing that we are talking about.

especially with plans by Lagos State government to build an airport at Lekki corridor You see my people say, ‘God takes care of fools, children and drinkers,’ you have to define what an airport area is. From a geographical centre of an airport, ten miles radius up to 2500 feet is an airport area. When you take off from Lagos, you take off from MMIA there; you are already in Lekki in seconds. This is an accident looking for a place to happen but people just want to do prestigious projects but I want to see who will license them. Who will give them certification to operate airport inside control Continues on pg 45 C M Y K

34 — Vanguard, MONDAY, MAY 21, 2012

Insurance

ICA criticises flood mitigation funding

he Federal Budget has left flood-prone communities exposed by not providing enough for mitigation infrastructure in last week’s Budget, the Insurance Council of Australia says. CEO Rob Whelan says the Government’s priorities are “short-sighted”. “Despite the chaos, destruction, heartbreak and financial hardship caused by floods across three states over the past 18 months, the Federal Government has failed to heed the insurance industry ’s call for urgent investments in flood mitigation works,” he said. The budget allocates $26.1 million a year for the next four years for natural disaster resilience. “We would rather have seen a substantial, far-sighted budget investment in measures that would protect frequently flooded towns,” Mr Whelan said. “Building permanent levees around dozens of flood-prone communities and improving flood mapping would ultimately mean governments would spend much less in disaster relief funding.”

Annuity sales fall 8% in 1Q

otal annuity sales declined eight percent in the first quarter compared to the first quarter of 2011, to reach $54.8 billion. Variable annuity sales, which largely sustained overall sales the past eight quarters, experienced a seven per cent drop in the first quarter, totaling $36.8 billion. “As we noted last quarter, we are still seeing companies carefully manage the risks associated with guaranteed living benefit riders. As a result, VA sales dropped despite the 13 per cent equity market gains in the first quarter,” said Joseph Montminy, LIMRA assistant vice president, annuity research. “However, consumer demand for GLB riders continues to be strong; VA GLB election rates remained at 90 percent this quarter, matching the recent high hit last quarter.” Total fixed annuities dropped 10 per cent in the first quarter to $18 billion. LIMRA expects fixed annuities’ struggles to persist as long as the interest rates remain low. Indexed annuity sales remain the driving force in the fixed market, jumping 14 percent in the first quarter, to reach $8.1 billion.

The poverty level in the country is preventing the insurance sector from assuming its pride of place in the economy; experts are of the opinion that government has a major role to play in bringing about a paradigm shift

The crippling effect of poverty on the insurance sector business will actually depend on disposable income. According to Oshin, not only does retail business depend on disposable income but also on availability of credit. He said “Retail business sits on the back of credit business, and if the banks are no longer lending, then retail business is crippled. Abroad where they talk of retail business being very successful it is because everybody there is a debtor, nobody uses money to buy television set, car or do anything. So you are a debtor to a financial institution and therefore on the back of that the financial institution gets insurance. Here we started that about four years ago when the banks were getting aggressive and throwing credit cards and debit cards at everybody and inviting people to come and take loans. If that tempo had continued, by now we will be sitting on a good structure to execute retail business. But all that have been withdrawn, banks are no longer lending, there is no disposable income anywhere.”

By ROSEMARY ONUOHA

igeria, no doubt is blessed with a very large population but the extent to which this huge population has positively impacted on economic development still leaves a lot to be desired. A large population, according to economic experts, is an advantage to any country even of more advantage is a large population to a country ’s insurance sector because insurance thrives in large numbers. But while it is generally agreed that the Nigerian insurance industry has an enormous market waiting to be explored and exploited, the purchasing power of a large percentage of the population which constitutes the potential market is abysmally low. And this is the dilemma in which the Nigerian insurance sector has found itself. Poverty has become a household name in Nigeria. Majority of the country ’s population, according to the statistics released by the National Bureau of Statistics are poor. The report said Nigeria’s poverty rate stood at 69 per cent in 2010, while 93.9 per cent of Nigerians considered themselves to be poor in 2010 against 75.5 per cent recorded in 2004. With a demoralising statistics such as this, one now begins to wonder how any insurance sector which thrives in line with a prospering population can grow. While it is generally agreed that insurance has the capacity to boost economic prosperity, experts are of the opinion that the fundamentals that can cause the Nigerian insurance sector to act as economic catalyst are regrettable lacking. According to the President of the Chartered Insurance Institute of Nigeria, CIIN, Mr. Wole Adetimehin, economic analysts particularly the CBN officials and the people at the National Planning Commission have always come up with different indices. “In reality can we really match all these inspiring attractive indices to what we have on ground?” Adetimehin queried.

Economic insurance

role

Insurance, according to experts, has a huge role to play in the Nigerian economy. According to Managing Director of Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, insurance is the

Olusola Ladipo-Ajayi

BRIEFS

Many people that should actually be buying insurance products do not have jobs

most effective means of reducing the vulnerability of the impacts of disease, theft, violence, disability, fire and other hazards. In life, risk can be handled either by assumption, combination, transfer or loss prevention activities. Insurance schemes, Ogunbiyi said, utilise the combination method by persuading a large number of individuals to pool their risks into a large group to minimise overall risk. Consequently, where a large number of people cannot be persuaded to pool their risks together due to low purchasing power, the business of insurance suffers.

nsurance protects against unexpected losses by pooling the resources of the many to compensate for the losses of the few, the more uncertain the event the more insurance becomes the most economical form of protection, Ogunbiyi noted. He explained that the primary function of insurance is to act as a risk transfer mechanism, to provide peace of mind and protect against losses. However, for insurance to thrive there ought to be a pool of fund to create liquidity which will facilitate quick payment of

claims when the need arises.

The way forward The challenge As important as the role of insurance might seem in economic development, the Nigerian insurance sector is largely handicapped to drive the desired economic transformation. According to Managing Director of FBN Life Assurance Ltd, Mr. Val Ojumah, insurance presupposes that one has an income and the fact that the economy is growing at an average of 6.5 to seven per cent does not mean that the larger population is better off. He said “Unemployment rate is about 69 per cent. So many people that should actually be buying insurance products do not have jobs, so where will they find money to pay our premium? So we have a large population of poor people.” For Adetimehin, if the level of disposable income is nothing to write home about there won’t be increased demand for insurance products from the public, adding “So if the industries rather than increasing in number or expanding by the day are shrinking and laying off people, how do you expect the insurance sector to grow. When the level of disposable income is nothing to write home about, where do you expect to find the demand for insurance products? Managing Director of Custodian & Allied Insurance Plc Mr. Wole Oshin, said that the economy at the moment is not ready for broad based retail insurance business because broad based retail

For the insurance sector to attain its pride of place in the economy, Chief Oladipo Bailey, former Commissioner for Insurance and Chief Executive of Shepherds Insurance Brokers said that the government should work towards stability and national unity as a necessary step towards ensuring investment growth, job opportunities and poverty eradication. According to Bailey, the insurance sector should find out ways and means capable of providing the population with products that will match their purchasing power and living standard. Oshin on his part called for a banking system that is very strong in retail, stating, “Once the financial services sector is very strong in retail, the insurance companies will key in on that. We had a lot of lease businesses when the banks were throwing cards at everybody, it was growing, people were getting information from banks to come and get loans. People have easy access to capital but that is not the situation today.” For Adetimehin, it will be difficult for any sector of the national economy to experience any growth when the basic infrastructure is not receiving due attention year in and year out. “It is common knowledge that till today the battle to build a stable power supply has not found a solution. There is no way any economy or industry will grow when you don’t have stable power supply,” Adetimehin noted.

Vanguard, MONDAY, MAY 21, 2012 — 35

he second message, which arrived incomplete, has all the trademarks of my good friend, Chief Bobson Gbinije, living in Warri and a patriotic Nigerian, if ever there is one and a deeply concerned Deltan about any matter relating to Delta. His alarm is shared by all well-meaning Deltans, as well as Nigerians. More than we realise, states are to some extent, artificial creations of politicians and the military. Our lives and our future are more inextricably linked across state lines than we suppose. The message raises two fundamental issues for the media commentator who must be fair to all concerned – including the government of Delta state. Since it is a basic rule of journalism that facts are sacred, who ever makes a categorical statement must offer proof. So, to my friend Bobson goes the first question: has N40 billion actually been spent? And where is the evidence? However, because the accused entity is government, in which everybody has a stake, the next question, which incidentally takes cognizance of the concerns of the first message, goes to the

FDI: Our own worst enemy (Asaba Airport as case study)–2

Asaba Airport Delta State government. How much has actually been spent on the airport? And is it true that the original estimate was N14 billion? In short, is there any truth to the accusations? The first message, whose author was graceful enough to worry about my reputation, poses a wider set of problems than issues relating to the Asaba Airport; it actually goes into the ultimate perceptions of Deltans about governance in their state and TRUST in the governor. It is that confidence in me, which underlies the message that has now prompted me to present the accusations in public, so that everybody can intervene. As usual, let me state clearly that I last met Governor Uduaghan, personally, five years ago. And no envelopes changed hands. Actually, any columnist worth his salt who wants to be compromised, and get rich doing so, will be better laundering the image of the President of Nigeria; the Presidency holds Nigeria’s biggest pot of gold. Yet, I have been critical of every Head of State, military or civilian since General Yakubu Gowon till Jonathan. So, the author need not worry too much, even if in the course of this series on the Asaba Airport some things are written on which there is disagreement. As she advised, by the time you read this second part of the series, I would have endeavoured to get as much information as possible about the airport. Any categorical statement read here can be substantiated. I am aware that the Delta State government has an image problem; I also believe that they have not explained themselves

“0803-301-9018 ir Uduaghan has no clue about governance. He mouths a 3 point agenda which has gone nowhere for 5 years. His only agenda was and still to cover up thieving of our commonwealth by Ibori and their clan. Pls ask them how much they have spent on the airport so far. Ask them if they did any feasibility study, why the so called ant hills were not identified. According to them, the need for citing the airport in Asaba was to bring in revenue from the use by traders in the east. So why was it not built to that specification in the first place to accommodate bigger planes. Sir, pls ask the right questions otherwise you stand the risk of tarnishing your hard earned reputation…” “0805-823-1669 The Asaba airport has turned out to be a case of financial terrorism nd a brummagem Barmecidal dish in Delta State (frm N14 billion to over N40 b….”. The columnist, given a small ration of space in a newspaper, each time, runs great risks of being m i s u n d e r s t o o d . Consequently, he gets punished, justly it must be added, by his readers for submissions not fully explained. The two text messages represent both the spanking, deserved by me, as well as an opportunity to explain more and to get more involved in this matter than anticipated when it started. Permit me to start with the second.

If the Asaba airport is potentially viable, then the government which conceived of it should receive credit for that idea first. And we should never forget that, “Ideas are the real capital; the rest is money”

enough on this project. So, for now, suspend suspicion, I will get the answers – sooner or later.

aving said that; let me quickly recap what was written last week; the real content of which was not an endorsement of the government’s spending on the airport in general. There were three key points. First, a friend in the US wanting to invest in Nigeria in certain sectors had asked me to survey other airports other than Lagos, Abuja, Portharcourt for his venture. On my own, and without holding discussions with government officials, I visited and shortlisted three airports – Owerri, Asaba and Uyo; and I highly recommended Asaba. But, there is a problem. Of the three, Asaba is the least developed and there is a need to know what the future development plans for the airport are. So, I have been trying to get an appointment with Delta government. The planned Foreign Direct Investment, FDI, involved will be enormous. By, the

way, the potential investor has a second choice – Ghana. It will break my heart if the money goes away to Ghana. Second, there was controversy over the N7.5 billion spent to level “anthills” preparatory to the President’s visit. There is no way for me to verify if indeed N7.5 billion was spent; and if it was only disbursed to clear ant-hills. My point on that is simple. If any state, Delta or not, has to spend N7.5 billion to ensure the safety of President Jonathan, they should do it; because, if any harm comes to Jonathan, Nigeria will lose over N2 trillion of naira within a few days of that occurrence. That still remains my position – even though I also think Jonathan should be planning to return to Otuoke, with truck loads of shoes, by 2015. Until, then he must be protected at all costs.

hird, and just as important, I warned that we risk losing FDI which the Asaba Airport might already be attracting by the noise over the N7.5 billion. Ordinarily,

it is not the investors business whether you spend N40 billion or N400 billion on an aviation sector infrastructure. He is only worried about whether it will serve his purposes. Furthermore, the fundamental question which everybody should ask is: will the Asaba Airport, as conceived be feasible, at any cost? If it is not, it will still constitute a waste of resources at forty naira (N40). Several examples already stare us in the face – Ibadan, Akure, Minna and Sokoto. Even if no kobo was stolen when the contracts were awarded, to me, they have become monuments to somebody’s ego. The issue of whether the Asaba or Gombe airports represent value for money is secondary to determining whether they should be established in the first instance and if they are viable. If the Asaba airport is potentially viable, then the government which conceived of it should receive credit for that idea first. And we should never forget that, “Ideas are the real capital; the rest is money”. It will amount to a deliberate misreading of that last statement to conclude that I endorse corruption. To the best of my knowledge, I have published the first attempt to document official corruption in a book titled PDP: CORRUPTION INCORPORATED. That is volume one; volume two is now being compiled and it will focus the grand larceny at state levels – all 36 states of Nigeria and the Federal Capital Territory. The dilemma some of us face is again simple. We realize that Nigeria has infrastructure deficits everywhere – power, road, railways, waterways, airports, schools, hospitals etc. To reduce the deficits huge contracts must be awarded. Huge contracts mean that some kleptomaniacs get the opportunity to rob us blind. Apparently we can’t have one without the other. So, when the road is built, we clap first; then shout “thief” after. Right now what I am doing is clapping on account of the potential benefits the Asaba Airport will confer to Asaba, to Delta and to Nigeria. Rest assured, if there is evidence, I will join in shouting “thief ”. All, we have now, as journalists will say, are rumours. And nobody, not even the Governor of Delta State should be condemned on hearsay. Wait for my findings about the airport. I think that is fair – to all concerned.

36 —Vanguard, MONDAY, MAY 21, 2012

C M Y K

Vanguard, MONDAY, MAY 21, 2012 — 37

Aviation

From left: Bishop David Oyedepo; Chairman, Air Nigeria, Dr. Jimoh Ibrahim and his wife, Mrs. Modupe inspecting the Air Nigeria Aircraft a 330-200 on arrival at the Murtala Muhammed International Airport, Ikeja, Lagos

NAMA to switch to performance based navigation By LAWANI MIKAIRU & DANIEL ETEGHE

igeria is to switch to the satellite based navigation system also known as the Performance Based Navigation (PBN) soon. This is comi ng as airline operators and pilots have been urged to key into the satellite based navigation system . Disclosing this development to newsmen over the weekend, General Manager, Public Affairs of the Nigerian Airspace Management Agency (NAMA), Mr. Supo Atobatele pointed out that there was a meeting between the agency and all the airlines operators and pilots to inform them about the need to key into the satellite based navigation system which will take effect soon. ”On Tuesday, we met with the pilots in the industry and airline operators, just to inform them about the development in NAMA, particularly the satellite based navigation system also known as performance based navigational system. Like you know, some weeks ago, we migrated from the terrestrial air navigation system to the satellite-based navigation system” ”So, we need to tell them what we have on ground and what they should do. Particularly, for you to operate within the sphere of the PBN system, your aircraft must be compliant, it must carry the prerequisite gadgets. So what we are trying to do is to just inform them” Atobatele affirmed.

He however stressed that any time from now NAMA would announce the commencement of the satellite based navigation system adding that airlines that would operate on the system are only those whose aircraft are compliant with the PBN system. ”Anytime from now, we will announce a specific date for the commencement of the PBN system in Nigeria, particularly for the major air routes and airports like Lagos, Abuja, Port-Harcort, and Kano” Mr Atobatele said the test flight has been done by Emirates Airline as the first to carry out the approach test on Global Navigation Satellite System, GNSS, in Lagos while the KLM recorded same in Kano. South Africa Airways has equally joined and they did it on their own and it was 100 percent successful. He therefore urged all the local airlines to join too. Mentioning the benefits of the PBN Mr. Atobatele noted that aircraft that are compliant will land faster as it will facilitate seamless flight operation without the pilot having to contact the Air Traffic Controllers ,ATC, all the time as they can see all the information on the culpit while flying. Earlier, Nigeria migrated from terrestrial air navigation system to a satellite-based navigation system with Emirates Airline acting as the first airline to carry out the approach test on Global Navigation Satellite System, GNSS, in Lagos while the KLM recorded same in Kano.

38 — Vanguard, MONDAY, MAY 21, 2012

Agric

High quality cassava inclusion in bread is possible - Olaniyan … UTC achieves 20% inclusion in products …. Gets NAFDAC support

BY JIMOH BABATUNDE with agency reports

The Official Launch of Commercialised High Quality Cassava-Based Bread by the UTC Nigeria Plc took place at the company HQ in Ilupeju . Px shows centre Dr Paul Orhii,DG NAFDAC tasting the cassava bread while Mrs Folusho Olaniyan,MD/CEO UTC Nigeria Plc left and Mr James Awoniyi, Member Cassava Value Chain Office of the Hon Minister of Agriculture right looks on at the occasion Px Biodun Ogunleye

he Managing Director of UTC Nigeria, Mrs. Folusho Olaniyan, said the company has been able to achieve a sustainable commercial recipe for White Bread and Wheat Grain Bread, with 20 percent high quality cassava She made this disclosure while receiving the Director General of the National Agency for Food and Drug Administration and Control, NAFDAC, Dr. Paul Orhii in her office in Lagos on Thursday. Mrs. Folusho Olaniyan explained that the organisation encountered several setbacks but after 92 trials and other challenges finally in February, 2012 was able to achieve 20 per cent high quality cassava flour inclusion in the bread. Olaniyan pointed out that UTC has successfully replaced wheat flour not just in bread but in doughnuts, cakes

and other pastries. She explained that when they were invited by the government alongside other bakers in the country to spearhead the production of cassava bread and other cassava flour-based confectionery, we took it as a challenge to empower our farmers.” According to her, UTC envisaged move to produce cassava bread would be successful, “We were passionate about its goal despite the fact that it was unsure of how or when these goals would be achieved. The company encountered several setbacks, but was able to find a path around these obstacles. It took risks and it paid o! Olaniyan explained: “After 92 trials and almost three months from the date of our initial trial, we were able to crack the nut, and in February 2012 we achieved a sustainable commercial recipe for White Bread and Wheat Grain Bread, with 20 percent high quality cassava “our inclusion. Today, she said with joy that what they have achieved within three months in terms of including High Quality Cassava in their products is what others have not been able to do in years. We also standardised and commercialised our Cakes and Chopsy Beef Roll recipe with 30 percent high quality cassava “our inclusion.

Vanguard, MONDAY, MAY 21, 2012 — 39

ICT

Dr Eugene Juwah, NCC Executive Vice Chairman

Telecom operators, service providers set to clash over revenue formula

he Nigerian labour market may soon get massively bloated, if the Nigerian C o m m u n i c a t i o n s Commission, NCC, does not quickly wade into the looming battle about to break out between the telecom operators in the country and their counterparts who provide value added services. The brewing battle is following a disagreement between the operators and VAS providers on a revenue sharing formula proposed by the operators, which the VAS providers say is exploitative.

Unfair revenue formula? Vanguard gathered that trouble started when one of the telecom operators, Airtel Nigeria, penultimate week, wrote the Value added service operators, proposing to change the running VAS revenue sharing formula of 60:40 percent to 75:25 percent between operators and VAS companies respectively. This proposed formula had angered the umbrella body of the VAS providers, the Wireless Application Service Providers of Nigeria, WASPAN, which not only vowed to resist the move but described it as not being in the best interest of the growth

BY PRINCE OSUAGWU

As we keep growing, the revenue formula will keep changing. We may not have the same agreement with them like some of the operators that are bigger than us in subscriber base

of Nigerian telecom industry.

The Indian connection The group alleged that Airtel may have come up with the alleged biassed sharing formula to tactically push them out of the agreement so it could bring in the Indian VAS providers to ensure that its economy continued to circulate within. The group cautioned that if Airtel is allowed to have its way, other operators would follow suit and the local content providers and thousands of Nigerians they employed, would be out of jobs and further stress the Nigerian labour market. The VAS operators further argued that the plan by Airtel represented yet another strategy by mobile network operators to run down the businesses of VAS companies due to perceived weak

regulation of VAS services and called on NCC to step into the matter to prevent crisis in the telecommunications sector.

Allegation is laughable — Airtel However, when contacted, Airtel denied that it had even imagined bringing in Indian VAS operators to take over the services provided by Nigerians, describing the allegation as laughable. It stressed that the decision to review the sharing formula was strictly on business grounds, devoid of any ulterior motive, adding that the fact that top owners of the company are Indians does not make Airtel Nigeria an Indian company. According to a senior official in Airtel Nigeria who didn’t want his name in prints, “is it not laughable that Airtel

Nigeria would just ferry in Indian VAS operators to come and provide the services that the Nigerian VAS operators have been providing? This is a pure business decision and every company has a different business agreement. The business we have with the VAS operators is a business of numbers. As we keep growing, the revenue formula will keep changing. We may not have the same agreement with them like some of the operators that are bigger than us in subscriber base. Neither would our agreement with them be the same with the operators we have greater number of subscribers than. You, see, this is business, if you like my terms you do business with me but if you don’t, you take your business elsewhere. I don’t think this is a big issue. In any case, some of their members have signed the agreement and we are doing business with them. I don’t know why a few of them are making issue of a simple business matter”

We may go to court— WASPAN Meanwhile, Head, Business Development, WASPAN, Eunice Benjamin_Ade, had told Vanguard that companies that are affected by the proposal have already contacted their lawyers to seek possible legal redress of the matter if other steps taken to redress the matter failed. She said, “We want to state our outright rejection of this

plan by Airtel, as we believe that it is an unacceptable imposition that threatens the very existence of the businesses of VAS companies in Nigeria and it is one that is not based on any prior consultation with any member of WASPAN. “We have already communicated our rejection of this advice by Airtel to the Nigerian Communications Commission, the regulator of the telecommunications industry and intend to do more, including going to court, if necessary. We call upon NCC to intervene in this matter urgently to forestall an unnecessary industrial dispute in the telecommunications industry.” Benjamin_ Ade said Wireless Application Service Providers are legally_registered businesses in Nigeria that operate based on laid down business laws and have helped develop various offerings in the telecommunications sector since inception until now, noting that the move by Airtel could destroy gains that have been made over the years. She added that VAS providers have consistently allowed a change of revenue share over the years in favour of operators and will not agree to any further shift that will reduce revenue that accrue to VAS companies. “We believe that the recent moves by various operators to continue to change the revenue sharing ratio in their favour will not only set the stage to run down businesses of many wireless providers, but one that could eventually destroy the entire industry,” she said. The new development represents yet another twist in the battle between mobile network operators and Value Added service providers over the sharing of revenue generated in wireless application services. WASPAN only recently dragged one of the leading GSM companies to the Nigerian communications Commission over its refusal to pay accumulated VAS revenue for over 12 months.

NCC may wade in However, NCC told Vanguard that the report has not come to it officially and promised to take action when it is officially briefed on the issue. Executive Vice Chairman of the commission, Dr Eugene Juwah when confronted with the matter, admitted that Value added service was part of a licensable set of services that run on mobile networks but added that NCC was yet to develop requisite regulation for such services. He said that if settlement of disputes on this area becomes problematic, the commission could event go the extra mile to convey a stakeholder conference to trash out the dispute.

40 — Vanguard, MONDAY, MAY 21, 2012

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Vanguard, MONDAY, MAY 21, 2012 — 41

Cover N15.6 billion in 2007; N29. 5 billion in 2008; N36.8 billion in 2009 and; N52.2 billion in 2010. According to the NHF Act, a minimum of 20 per cent of non life funds (N119.96 billion) and 40 percent of its life fund (N59.02 billion) should be invested in real property development. This amounts to N178.98 billion for the five year period. The Act further stipulates that not less than 50 per cent of investment in property development should be paid into the NHF through the Federal Mortgage Bank of Nigeria (FMBN). This means that between 2006 and 2010, the insurance companies in Nigeria ought to have paid at least N89.49 billion (50 percent of N178.98) into the coffers of FMBN for the housing fund. It therefore followed that banks and insurance firms should have contributed N8.494 trillion and N89.49 billion, respectively, into the coffers of NHF between 2006 and 2010, cumulatively adding up to about N8.58 trillion.

Banks, insurers owe N8.6trn in 5 years DEVELOPERS Vanguard also got other stakeholders to bare their minds on this development which has far reaching implication on housing finance in Nigeria. Chief Olabode Afolayan, President of Real Estate Developers Association of Nigeria (REDAN), the umbrella body of property developers in the country, said the general attitude of banks to housing finance in the country is lamentable, declaring that their non-compliance with the provisions of the NHF Act in particular will be taken up by his association. “It is a serious matter, which bothers on violation of the constitution. What we intend to do is to set up a committee of experts to critically look into this and advise us appropriately. We will take steps to sensitize the National Assembly on the development, and also write to the CBN because this shows clearly that the apex bank has not been playing its expected role as a regulator of the banks. After thoroughly examining the issue, we may

even go to court to ensure that they take up their responsibilities under the NHF Act,” he stated. Afolayan added that a lot of advocacy is also required on the part of the mass media to bring out some of these facts into the public domain in order to ensure that everybody plays its role in financing housing development in the country. In his own reaction, Managing Director/CEO, Lagoon Home Savings & Loans Ltd, Mr. Kehinde Taiwo, said: “I’m not very sure of this provision. I’m only aware of similar regulation under the SMEs where banks are specifically required to yield up 10 percent of their PAT to the CBN. Most banks chose to set up institutional vehicles to run this scheme. But the question is how successful has it been up to date. Since banking deregulation, in terms of sectoral allocation of credit portfolios, it has been clearly established that given all the liberties of deregulation, banks are not inclined towards any long

Continued from page 18

We will take steps to sensitize the National Assembly on the development, and also write to the CBN because this shows clearly that the apex bank has not been playing its expected role as regulators of the banks

term lending. Housing loans share this attribute. Unfortunately, there is no strict enforcement of these rules. Where CBN make attempts at some enforcement, you discover most banks would gladly oblige the penalties as these are cheaper than the financial cost of complying. The regulations may be there but implementation and effectiveness is another thing.

That’s the bane of Nigerian banking system for now.” NHF COLLECTIONS Data available from FMBN shows that NHF collection as at February 2012 is N81.597 billion from 3,657,354 registered contributors, from inception of the fund. Out of this, the bank had disbursed N34.036 billion as NHF loans through the PMIs, while N49.182 billion was disbursed as Estate Development Loans (EDL), bringing the total NHF loans that have been disbursed to N83.218 billion. FMBN also noted that as at February 2012, houses built with Primary Mortgage Institution (PMI) loans are 18,668 units while those built with Estate Development Loans (EDL) are 32,950 units. This shows that the NHF scheme has been able to deliver just 51,618 housing units across the country since inception in 1992, representing an average development of about 2,581 units per annum over the last 20 years. According to FMBN’s Managing Director, Mr. Gimba Ya’u Kumo, this is too insufficient.

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42 — Vanguard, MONDAY, MAY 21, 2012

Appointment & Promotions vicahiyoung@yahoo.com

BRIEFS Labour leaders tour ports formations ARITIME Workers of M Nigeria, MWUN, has charged workers in the sector

From Left: Sola Oke, Marketing Innovation Manager, Devlin Hainsworth Managing Director, Guinness Nigeria Plc, Udo Anya, Sales Director and Tunde Adegbola Plant at a Press Meeting announcing the launch of Malta Guinness Low Sugar in Lagos.

Mimiko bags Lions Club’ highest award

O V E R N O R O l u s e g u n Mimiko of Ondo State, has been named the beneficiary of the highest award of the International Lions Club, the Melvin Jones award. The District Governor of the International Association of Lions Clubs, Kola Oyekanmi, announced this during a courtesy visit to Governor Mimiko in his office in Akure. The Governor of district 404A of the Lion’ Club explained that Dr Mimiko deserved the honour because of the unique similarities between his administration’s programmes and those of the club. Oyekanmi noted that the club had watched critically the various noble achievements so far recorded by the Mimiko administration, especially those impacting positively on the lives of the common man. He said the leadership of the club was convinced that the Mimiko administration had delivered the dividends of democracy to the people and therefore deserved to be honoured with the highest award.

According to him, “the club with about 1.4million members worldwide has touched the lives of the people at the grassroots which he said has a lot of similarities with the Mimiko philosophy.” Responding, Governor Mimiko appreciated the efforts of the club at adding values to the lives of the people and said government alone could not meet all the needs of the people.

Dr Mimiko, who assured of his administration’s collaboration with reputable organizations with a view to transforming the landscape of the State, noted that the synergy between his administration and the people had resulted into massive development of the State and unprecedented support for the administration. He said “I want to thank you

NDYLAC honours FCT Minister

iger Delta Youth L e a d e r s Administrative Council, NDYLAC, has conferred the 2012 Leadership and Friend of Niger Delta Award on the FCT Minister, Senator Bala Abdulkadir M o h a m m e d . The Minister who received the Award at a ceremony in Abuja, appreciated the honour done him and advised youths in the country to strive more to unite the nation.

Mohammed urged youths to de-emphasize anything capable of dividing the country, stating that all segments of the federation were very important to the socio-economic development of the entire nation. The Minister paid tribute to President Goodluck Jonathan, saying his administration hasdbrought hope to ordinary Nigerians, while providing a new face to the country ’s leadership. He advised Nigerian

TUC rolls out 150 buses T

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RADE Union Congress of Nigeria, TUC, has rolled out 150 buses worth N2.3 billion for both intra and inter- state transportation. President-General of TUC, Mr. Peter Esele, said at the roll out in Lagos that “We took a loan from Urban Development Bank during President Umaru Yar’Adua’s administration and it was guaranteed by the government. Esele said TUC was expected to pay back the loan in 5years which interest of 5per cent would be paid to Federal Government that

for what you are doing to the society. In actual fact, I’m not surprised at your achievements as a reputable club because of the calibre of people in the club. There is no way government alone can combat the poverty in this land, we need the support of people like you. You don’t have to be political leaders at any level to serve your people”.

guaranteed the loan. On why TUC ventured into the business, he noted that apart from profit, it would create symbiotic relationship between members and Nigerians masses. He assured sustainability of the buses, emphasizing that the operations would be handled by Country Wide Logistics and Eko Mega City operators. According to him, “We want to start in Lagos first because of the population and later extend it to other states which depend on our operators.

Bala Mohammed

youths to come together to form formidable partnership to resolve all the country’s differences and move it to the next level. Mohammed said his administration had been opening new frontiers to improve the lives of ordinary residents of the FCT, promising to continue along that line in consonance with the transformation agenda of President Jonathan. He thanked the NDYL AC for the recognition, assuring that the award would encourage him and would not be deterred. Earlier, President of NDYLACl and African Representative, World Assembly of Youths, Ambassador Marvin Yobana, said Senator Mohammed had been selected for the award because he was one of the outstanding supporters of the Transformation Agenda of this administration with an underlining belief for its total success. Ambassador Yobana said, “It is a mark of your patriotic commitment to a united Nigeria and indeed a friendly disposition to the Niger Delta people and we say thank you to your 108 distinguished colleagues.”

especially Dockworkers, to be vigilant in the course of their duties and ensure that unscrupulous and evil minded importers do not smuggle weapons through the ports into the country. President-General of MWUN, Mr. Anthony Nted, while addressing maritime workers at Apapa Ports as part of the labour leaders tour of Port formations in the country, said the security of the nation and Nigerians should be the responsibility of every well meaning Nigerian. Comrade Nted who said leaders of the union had toured the Warri, Onne, Port Harcourt and Calabar ports with similar message, argued that security operatives in the ports may not do thorough examination of containers imported into the ports, but the Dockworkers who off load the containers are at a better position to actually know the content of a container irrespective of whatever the importer claims. He noted that as members of the union and patriotic Nigerians, they have a duty to not compromise their loyalty to the nation even if others compromised. According to him, “the rate of insecurity in the country should be of concern to you and other well meaning Nigerians.

Works Minister gets NGSS fellowship award

ORKS Minister, Arch Mike Onolememen, has been honoured with the Award of Fellowship by the Nigerian Mining and GeoSciences Society, NGSS. President of NGSS, Engr Akin George, at the award ceremony, said that the body had watch with keen interest the reform, changes and improvement that the Minister had been unveiling in the ministr y. George noted that the society had followed the antecedent of the minister right from Defence as the Minister of State to his present appointment, saying the body was proud of him. Speaking, the Minister said he did not mince words when he said he was going to do something drastic about road failures in the country which culminated into the upgrading of Material, Geotechnic and Quality Management department to afull fledged department.

Vanguard, MONDAY, MAY 21, 2012 — 43

Economy BY FRANCIS ATUCHE

he 2008 global finan cial crisis spared no nation. It impacted every country with ferocious intensity, spiraling into lukewarm confidence and untold economic misery for people across the globe. Yet, for each country, depending on the potency of its unique counter prescription, the aftermath differed vastly. countries, either out of misguided intent or for lack of will to look beyond the frails of sentiments, called upon themselves the full wrath of the crisis. Other countries waged war against it, reaching for every imaginable policy tool to confront the crisis. As expected, the latter countries averted the full fury of this global calamity.

The U.S response The floor of the Nigerian stock Exchange

A capital market in comatose, the way forward banks in exchange for dividend paying preferred stock; an economic stimulus package worth US $168 billion in the form of tax rebate checks. Following the outcome of stress test conducted by the Federal Reserve Bank, 10 of America’s 19 largest banks did not measure up and as such required US$75 billion within a period not exceeding 6 months. The US Federal Reserve, unlike the CBN took the following reflationary economic steps as follows: the struggling banks to orchestrate a rescue plan within 1 month and also within 6 months, execute the plans; ailing banks that required funds to raise new common equity either from existing shareholders or new investors, convert preferred shares held by private investors or the government into common equity or sell additional assets; , upon application, bailout funds to banks that required further funds after exhausting other capital raising avenues listed above. Much more important than these collective tactics, was a rather calm, confidence building atmosphere ushered in by Federal Reserve Bank. With terse, reserved and well intended pronouncements, Federal Reserve Bank deferred any decision to remove CEOs/MDs of wanting banks,

As the U.S. considered the survival of its capital market crucial, it tailored its counter policies to methodically extinguish, at every intersection, the threats posed to this substructure. With the capitulation of Lehman Brothers and its damning effects on other U.S. financial institutions as well as on the real sector, the U.S. Federal Reserve Bank rallied to the experience of its immediate history. For a competent regulator, Lehman’s demise proved a scary glimpse of the catastrophe that lay ahead in the face of inaction or flawed prescription. Therefore, reacting like a savvy regulator that it is, the U.S. Federal Reserve Bank, in collaboration with the White House and the Congress as well as all their respective organs and committees, swung into action, invoking unbiased, evidence based, research driven economic therapies, including the bailout option, interest rate cut and various tax relief measures. While on one hand, this collaboration facilitated the rescue of such mammoth financial institutions and other strategic companies as Citibank and American International Group (AIG) through bailout funds, on the other hand, it downsized quarterly rates to historical lows, but not to the neglect of such other sectors as automotive industry, which also received bailout funds. In consonance, these efforts and collective measures spared the U.S. economy of predicted disaster, as inflation hike was tamed and job gains accelerated by 3%. Specifically, to restore liquidity to the financial markets and resuscitate confidence, team USA, including President Obama and the U.S Federal Reserve and other governmental agencies took the following actions: Launched the Toxic Asset Purchase Programme (TARP), which was estimated at US$700 billion for lending to

Our regulator’s actions were to the contrary, and so were the broad outcomes. Rather than wage war against the looming crisis, it may have ignorantly paired with the storm, to tumble the economy

to the affected banks’ shareholders whose fate are closely tied to the banks’ fortune, drawing on the simple analogy that those who stand to lose the most will go the extra mile to protect their stake.

Nigeria’s Response in comparison to U.S. Response As was experienced in the U.S, some banks in Nigeria did not live up to the stress test threshold of the CBN. However, unlike in Nigeria, where the regulator pronounced the outcomes of the stress test 45 days ahead its completion date, the stress testing in the U.S was an objective scoring of the banks’ health with the overall motive of alleviating the burden of banks, re-injecting funds (if need be) into the banks and as such re-igniting banking

lending again in order to spur the economy. In addition to pre-maturely instigating the outcomes of the stress test, the Nigerian Central Bank Governor faulted the memory capacity of the initial examiners because the outcome of their test did not qualify the banks for take-over. The well thought out, coordinated responses of the U.S. Federal Reserve, which are reflective, albeit in different dosage, of confidence building policy measures enabled such countries as Canada, Brazil, Chile, South Africa, and the Euro-zone to weather the storm. Unfortunately, Nigeria did not make this list. So, one wonders what the stress test so executed in Nigeria has achieved. Had the test been aimed at boosting confidence as was intended elsewhere in the globe, how

come the outcome of our own therapy has been different? Rather than resuscitate confidence, our regulator’s strategy viciously attacked capitalism and destroyed value and confidence beyond redemption. From an initial value of Ntrillion in 2008, the Nigerian capital market fell to N.3 trillion in the aftermath of the crisis, after which it rallied to N.0 trillion on June 26, 2009. Since then, despite additional listings of N2.3 trillion by Dangote Group, amongst other sizeable listings, the market is stagnated at N6.5 trillion. As such, it appears that the market may have lost at least N5 trillion. The reasons are not farfetched. Our regulator’s actions were to the contrary, and so were the broad outcomes. Rather than wage war against the looming crisis, it may have ignorantly paired with the storm, to tumble the economy. Without doubts, as the stress tests revealed, some of the Nigerian banks had liquidity challenges amongst other problems, which resulted from a culmination of factors, including but not limited to the sudden global collapse in prices, including crude oil price, the mass exit of foreign investors who due to the global crisis, pulled out of Nigeria in order to cover their short-falls in their home countries and the simultaneous crystallization of cross country liabilities across the globe. But given the disproportionately large size of the Nigerian banking industry, which stood at 60% of the market then, and the vast ramification of its demise on the broader Nigerian economy, the banking industry, ought to have been treated with utmost care. But the Nigerian CBN insisted on taking a rather expensive route. For 50 years, no CBN Governor had issued farreaching penalties on banks on the basis of a purported draft stress test report that was never discussed with the audited banks. Can this honorable house verify the reason(s) the CBN side stepped such crucial due process? The CBN not only abandoned its most urgent mandate to restore confidence in such trying times, it also sent shivers to the Nigerian capital market, striking at the heart of market confidence as shareholders grappled with the possibility of a sudden loss of their stake. For those resilient shareholders and daring investors who nevertheless held their stakes, their confidence was destabilized, and possibly eroded following frequent pronouncements of the CBN Governor, who largely portrayed our financial system as hopeless. Such utterances hit a crescendo when CBN Governor referred to our stock exchange market as a casino and opined that those who placed money there, and initially saw their stock price rise, have lost their money. *Francis Atuche is a former Managing Director of BankPHB

44 — Vanguard, MONDAY, MAY 21, 2012

Vanguard, MONDAY, MAY 21, 2012 — 45

Interview

Nobody put a gun over our heads when we were signing agreements Continues from pg 33 airspace? Airport inside an airport; nobody has thought of that. When you do a circle from Murtala Airport on take off, and another from Lekki, you do another circle inside, one airport inside another one, it is a tragedy. Even Owerri to Port Harcourt, you take off from Port Harcourt airport and before you get to runway 04, you are looking at Owerri airport. So, it is a serious matter because everybody wants to build an airport. Today, they have built one in Asaba, tomorrow they are going to build one in Onitsha. We are just preparing ourselves for accident to be happening all over the place because one airport will underlie another airport. But in the US, you find so many airports in a state. I give you a typical example of Miami airport. In Miami International Airport, we have another airport underneath it called Acolata Airport where we all got trained as student pilots. You will be on ground

in Acolata Airport; the radar controller in Miami International Airport will see all your movement on the ground. They know where students’ aircraft are; they restrict you to one area but here the radar will not pick aircrafts that are not up to 1500 feet. That is why when people want to commit atrocities, they fly under radar and you cannot detect them. That is our problem. So all these airports, prestige to build airport here, prestige to build airport there is not good for the country. I am not speaking for anybody but I want to stress here and now that the Minister should be encouraged to do what she is doing without fear or favour. The bulk lies with the President because tomorrow they will gang up and call for the head of the Minister. I know that because she is dealing with all of them now, tomorrow somebody will say ‘look, remove that woman,’ so I think they should give the woman a free hand to work. On how to sustain Federal Aviation Administration’s category one certification by

Nigeria What I said the last time I came here is that the same zeal that they used in attaining Category One, they should maintain it and well too. I am happy that they decided to ask Dr. Demuren to continue, he should continue and his lieutenants around him. I have seen all the appointments he is making; director of this, director of that, all those are good appointments. So I believe that we are maintaining it and Demuren is doing a very good job there. That is the truth. The other one is the MD of NAMA. An engineer has been appointed there. The young man is doing a very good job. Nnamdi Udoh is doing a very fantastic job there too but the one that they have trouble with is the FAAN MD. About Meavis and no Meavis, the man is giving a lot of “wahala”. On the ongoing face-off between the Federal Airports Authority of Nigeria, FAAN, and Maevis Nigeria Limited, concessionaire in charge of revenue collection for the airports authority

The matter is in court but I always tell them, nobody put a gun on your head when signing all those agreements or contract and they say ‘no we don’t want to do it again.’ Still on BASA Do you know what BASA is all about? It is an agreement that says ‘I will come to your country ten times a week; you come to my country ten times a week.’ Now they come but we do not go there again right. We will say ‘ok the ten times we are supposed to come to your country and we are not coming, give us the money in lieu of the ten times so that you can be coming twenty times,’ that is how it works. That is why they said that they can come as many times as they want because they paid for your slot and we are annoyed that they are coming. That is why the Nigerian government has said we shall set up our own national airline, and then it will now be who sold our airline? Who liquidated it? I know the liquidation was voluntary liquidation. it was not that they just decided, we are going to liquidate and they liquidated. On the 19th of April, one group in Nigerian Airways called 1999 group of pensioners, took the government to court and asked for 5 prayers and

the court granted their prayers. One; that they are civil servants, it is a constitutional issue, that they are entitled to their pension for life. The Nigerian government set up a committee to look at the modality for the liquidation of Nigerian Airways. The committee recommended that the staff should be paid 25 years, 20 years and 15 years. Government called the people and gave them paper to sign for 5 years, the people said ‘what, well, what we have we hold, let us hold this 5 years,’ then they started making their trouble again. They went to court, the court said out of the three recommendations 25 years, 20 years, 15 years, the court has granted them 20 years, they have taken 5 years, government should pay them the 15 remaining years or put them on pension until death do them part. Last week, the Attorney General said that they should give them seven and half years; the people said ‘ok let us hold our seven and half years.’ Meanwhile they are going to hold seven and half years and they have a court judgment on their hands. Now, if you calculate the money they paid these people, what they have used to settle claims on the liquidated airline, me and you could have gotten an airline today.

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46 — Vanguard, MONDAY, MAY 21, 2012

Tax Platform

AXATION in its strictest sense is much broader than tax on income, capital gains and stamp duties. It also covers tax on property, consumption and products, hence the source of confusion and legal action which has not helped in the development of the tax regime in Nigeria. Pending cases in the Courts may help decide conclusively on related matters. Suffice it to say that the prevailing position is that the Federal Government ultimately has overriding authority on taxation matters with some latitude to State Governments to introduce taxes, fee and charges (collectible by the Local Governments) in those areas that do not conflict with the position of the Federal Government. Governments at both Federal and State Government levels have used the omnibus clause i section 4 of the Constitution to address gaps identified in the taxation system. Section 4 clearly gives the State Government the ability to enact laws in the interest of peace and good governance, but also the Federal Government the same powers to enact laws in the interest peace and good governance, with the proviso that where there is a conflict, the laws enacted b the Federal Government prevail. The Nigerian Constitution generally allows the State and Local Governments broad discretion in establishing fees, charges, or fines as previously defined. These revenues (fees, charges, fines) should be seen as collected: for the privilege of engaging in certain activities; or in order to regulate a particular activity; or the purpose of imposing penalties. In some cases—such as many user charges, admission fees, and some regulatory fees—th payment is closely linked to the cost of providing a particular service to an individual beneficiary or regulated party. In other cases— for example, certain environmental or regulatory fees—the payment may not be directly related to the costs associated with particular participants, b more loosely related to a discrete group of participants or an industry.

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n some situations, the pay ment may not relate to direct regulation per se, but rather to broad social costs associate with particular activities—for example, environmental mitigation fees. Ideally, some link must exist between these payments and the related cost to governments in order to avoid’ progressing to a “tax.” Fees or charges must be based on some established relationship between the amount of the payment, on the

National Tax policy guidelines and rules (3) ered to collect those taxes from individuals resident in their respective States as may be determined by the National Assembly. The taxes imposed by the Federal government include Companies Income Tax, Personal Income Tax, Education Tax, Petroleum Profits Tax, Capital Gains Tax, Value Added Tax and Stamp Duties. Apart from income taxes, State Governments, through their Houses of

•Ifueko Omoigui-Okauru one hand, and the costs associated with th regulation of an activity or the provision of a good or service, on the other. Similarly, penalties must be considered reasonable given the specific incident of noncompliance. If a sufficient relationship, or “nexus,” is not established between the fee and costs of provision or regulation, the charge is considered a tax. This is an area for which legislation is required to conclusively make this distinction. An example of this difference lies in the distinction between the tenement rate and the property tax. They are not and should not be confused as one and the same thing. Tenement rates are typically linked to charges by the local authorities for the provision of public services to residential dwellings including multi storey, multi flat dwellings with multiple owners which may be owner occupied or rented. Property tax on the other hand is a tax based on the value of a house or other property. In Nigeria, the constitution provides for tenement rate, while Property tax is still a new concept in the tax system. Similarly, there is scope to have Environmental taxes, fees, charges or fines, none of which exist today. in conclusion, the National Tax Policy recognises that the Federal Government through the National Assembly is empowered exclusively to impose taxes on incomes, profits and capital gains and on documents of corporate organizations and governments (stamp duties), while each State Government is empow-

Assembly are also empowered to impose, fees, levies and rates collectible by them and Local Government Authorities in their respective states.

very person involved in tax administration, tax payers, Consultants, tax and revenue officials, all agencies of Government involved in raising and collecting Government revenue, those involved in Governance, the Executive, the Legislature, Judiciary and every Nigerian citizen or resident is hereby invited to subscribe to the National Tax Policy. Objectives of the Nigerian Tax System The Nigerian tax system is expected to contribute to the well-being of all Nigerians and taxes, which are collected by Government should directly impact on the lives of the citizens. This can be accomplished through proper and judicious utilisation of the revenues collected by government. In line with the above, there are certain objectives, which the Tax System is expected to achieve. These objectives include: To promote fiscal responsibility and accountability One of the primary objectives of the National Tax Policy is to create a tax system, which ensures that Government transparently and judiciously accounts for the revenue it generates through taxation by investing in the provision of infrastructure and public goods and services. Where this in place, Nigerians would have a tax system that they can fully relate to and which

is a tool for National Development. To facilitate economic growth and development The overriding objective of the Nigerian tax system should be to achieve economic growth and development. As such, the system should allow for stimulation of the economy and not stifle growth, as it is only through sustained economic growth that the potential ability to offer improvements in the wellbeing of Nigerians will arise. The tax system should therefore not discourage investment and the propensity to save. Taxes should not be a burden, but should be applied proactively with other policy measures to stimulate economic growth and development. To provide the government with stable resources for the provision of public goods and services For Nigeria to pursue an active development agenda and carry out the basic functions of government, its tax system should generate sufficient resources for government to provide basic public goods and services (e.g. education, healthcare, infrastructure, security etc.). It is therefore a primary objective of taxation to provide the government with resources that it shall invest in judicious expenditure that will ultimately improve the well-being of all Nigerians. To address inequalities in income distribution Nigeria’s tax system should take cognisance of our peculiar economic circumstances and seek to narrow the gap between the highest and lowest income groups. Those with the highest incomes should pay the highest percentage of tax and tax revenue should be utilised to provide Nigerians with affordable social amenities, basic infrastructure and other utilities. To provide economic stabilization Nigeria should use its tax system to minimise the negative impacts of volatile booms an recessions in the economy and also to help complement the efforts of monetary policy in order to achieve economic stability. To pursue fairness and equality Nigeria’s Tax system must be fair and shall institutionalize horizontal and vertical equity. Horizontal equity ensures equal treatment of equal individuals. The Nigerian Tax

system should therefore seek to avoid discrimination against economically similar entities. Vertical equity on the other hand addresses the issue of fairness among different income categories. In this regard, the Nigerian Tax System shall recognise the ability-to-pay principle, in that individuals should be taxed according to their ability to bear the tax burden. Individuals and entities that earn high incomes should pay a corresponding high percentage of tax. The overall tax system shall therefore be fair, so that similar cases are treated similarly. In addition, any ambiguity or conflicting provisions in the law shall be resolved in a manner as to ensure fairness to the taxpayers and the tax authorities. To correct market failures or imperfections One of the objectives of the Nigerian tax system is the ability to correct market failures in cases where it is the most efficient device to employ. In this regard taxes may be reviewed upwards or downwards as may be necessary to achieve Government’s intentions.

arket failures which the Nigerian tax system may address are those that are as a result of externalities and those arising from natural monopolies. Features of the Nigerian Tax System This section provides the fundamental features that taxes in the Nigerian tax system must exhibit. Accordingly any tax that substantially violates these fundamental features should not be part ofthe tax system of Nigeria. Taxpayers should understand and trust the tax system, and this can only be achieved if Nigerian tax policy keeps all taxes simple, creates certainty through considerable restrictions on the need for discretionary judgements, and produces clarity by educating the public on the application of relevant tax laws. It is therefore imperative that the Nigerian Tax system should be simple (easy to understand by all), certain (its laws and administration must be consistent) and clear (stakeholders must understand the basis of its imposition). To enable a high level of compliance, the economic costs of time required, and the expense which a taxpayer may incur during the procedures for compliance, shall be kept to the absolute minimum at all times. Furthermore, taxpayers should be regarded as clients with the right to be treated respectfully.

Vanguard, MONDAY, MAY 21, 2012 — 47

Media & Advertising

First Bank, Umoja sponsorship and restoration of stage art Stories by PRINCEWILL EKWUJURU

fforts to restore the culture of theatre, arts and stage performance in Nigeria received a major boost with First Bank’s sponsorship of the South African based troupe, Umoja. The one-day performance, which is aimed at celebrating arts, and ultimately restoring the culture of theatre, arts and stage performance in Nigeria, attracted high net individuals in private and public sectors, corporate organisations and the diplomatic community. In Nigeria, companies see sponsorship as a mechanism to drive their brands. The story of MTN, GLO and Cocacola as the official telecommunication companies and official drink for the 2010 world cup and the Nigeria premier league respectively explains the rational behind sponsorships. However, in what seems like a response to this global trend, First Bank had before now joined the fray of brands

oca Cola Nigeria Limited (CCNL) recently conclude its Open Happiness promo where it gave to consumers N1 million for 70 days and over 260million airtime, to ascertain the reasons behind the scheme. Princewill Ekwujuru in a chat with Toyin Nnodi, Senior Brand Manager flavours for CCNL, said the objective was to share happiness and reward loyalty. Overview of the Carbonated Soft drink market It is an interesting segment of the Fast Moving Consumer Goods (FMCG) market. Carbonated soft drink (CSD) is all about refreshment and that is the market Coca Cola has played in, in the last 126 years. It’s a very viable category that meets the needs of consumers. Often times the consumers need refreshing drink that keeps them going. Need for more entrants I cannot comment on what other people will decide to do. Or whether there will be new comers and products they will offer but I can confidently say that the range of Coke brands and flavours would always offer something special and unique to consumers. Global brand image, Open Happiness promo and objective It’s a campaign for the Coca Cola brand. We launched the Under the Crown Promo

that cling to sponsorship as a major tool to connect consumers. Like Kunle Brigg, a brand Consultant said, “ with sponsorship, sponsoring brands are exposed to many potential consumers and possible trade

partners.” Further, he observed that a brand that keys to activities that connects its target audience is likely to leverage on such sponsorship to win consumer loyalty. “It’s on record, if a brand supports

the youth market; it is natural for it to attract many consumers. It will be recalled that between 2006 and now when series of activities shook up the financial sector and separated the whiff from the chaff, First Bank has

From Left: Deputy General Manager, Marketing and Corporate Affairs of RedStar Express, Mr. Victor Ukwat; Chairman of the Board of Directors, RedStar, Mohammed Koguna; and the Managing Director, RedStar, Mr. Sule Bichi, during the company’s strategic meeting held at its corporate headquarters in Lagos, recently.

We are ready to bring more brands to Nigeria — Coca Cola (UCP) called open and win consumer promo. The whole idea behind the promo is that Coke stands for happiness and in everything we do, Coke desires to spread happiness to all its consumers. That was why we launched the promotion to spread happiness on the faces of Nigerians. Again, we realized that times are hard and we wanted to give back to our consumers and reward them for drinking Coca Cola. Consumer remuneration I would say yes. That is consumer promotion. Beyond the N1m prize, there were loads of airtime for mobile phones. Every day, we gave out thousands of airtime in different denominations ranging from N100 to N1,000. Yes, we produced 70 millionaires but consumers also won recharge cards. We gave out airtime because key to mobile phone is airtime. We also believed that the airtime will make the consumers happy to make them keep talking and sharing happiness. The winners cut across the social strata. We have seen undergraduates, graduates, traders, artisans, young professionals, civil servants. Promo as only tool

•Toyin Nnodi I don’t think it is the only channel to reward consumers. I really know that a lot of brands and companies run consumer promotion. But we as Coca Cola rewards consumers and other key stakeholders. From time to time, we run trade discount incentives where we give our dealers discounts on stocks. We may not make noise about it but we realized that dealers are key in business. There are other ways of rewarding consumers but the noise about promotion has tended to overshadow other schemes. Lessons learnt There were positive comments. I had the privilege

of calling one of the winners who just lost his accommodation and has no money to rent another house. On the phone, he was so excited about it. When you listen to such stories and the impact the promo has had on consumers, you will be touched and feel happy that you really impacted the lives of people. What gives me joy is that the people who won the cash are those who mostly needed it and this is joyful to any brand manager that his brand is touching the lives of people. We had winners from all over the country. The expectations were high among consumers but we were happy with the promo. We used SMS system to connect with the consumers because it was to easily reach the consumers. From research, we wanted a way we could make entry into the promotion as easy, seamless as possible. With phone, the airtime came to winners easily. On the lessons, the partnership with the network was a good one and because of the promotion, we generated a lot of traffic on the networks. Again we saw how the promotion generated happiness on the lives of consumers. Our consumers happiness is key to us. Plans to bring more

continued to introduce new marketing strategies that would make it sustain its leadership position. Among other things, there has been increase in its marketing budget, advertising spend, technology advancement and sponsorship.” Folake Ani-Mumuney, Head, Marketing and Corporate Communication, said that the choice of the dance group was predicated on the share values between the bank and the group in the areas of contributing to the economic and social development of the people. “While Umoja is committed to the empowerment of underprivileged South African Children, first bank is committed to deploying its financial expertise to provide quality, accessible and expertise affordable financial services to the populace with a view to enhancing the standard of living of Nigerians,” She said. With the Umoja, which in Zulu language means ‘’the Spirit of togetherness, the bank seems to be telling its patrons, wherever they may be and regardless of their status and age that First Bank identifies with them.

variants Coca Cola as a company sees innovation as key to its business because we want to remain connected to the consumers and we listen to our consumers through extensive research done. The Coca Cola Company has over 400 brands to its name in over 200 flavours. For flavours or brands that are relevant to our consumers, we will definitely consider bringing them in. For instance, consumers like Limca and they want it on the go and we launched Limca in PET bottle. Touching story of winners A lot of them were touching. The phone call I made to the guy that lost his accommodation really touched me. He was almost in tears and said that this is a prayer that was answered directly by God. The first three people were also excited over the winning. Mechanism for winnings management No. we did not put any mechanism in place. Our role was to give out the prizes. What we did was off the line advice to them to spend their money well. It is a gift from the company. It is like how we earn our salaries where employers don’t dictate to us on how we spend our money. Influencing consumer decision Since we are a soft drink business, the key need we fulfill is quenching the thirst and experience the pleasure the brand gives you.

C M Y K

48 — Vanguard, MONDAY, MAY 21, 2012

0817 002 3569

The government of Goodluck Jonathan insists that the current price of N97/litre accommodates a subsidy of about N55/litre. Some critics have, however maintained that there is in fact, no subsidy; others demand that even if it exists, it should be seen as the social benefit of having crude oil in our back yard. What is clear, however, is that irrespective of one’s position, federal government annual budgets have always provided for subsidy; nonetheless, the huge difference between a subsidy budget of less than N300bn in 2011 and indicated actual payment in excess of N2 trillion has become a source of consternation to most Nigerians. The huge discrepancies between the volume of fuel consumed and subsidies payable from the records of various government agencies, including the CBN, NNPC, PPPRA, etc, have not helped matters either; the ‘babel’ of statistics from these parastatals spoke volumes on the arbitrariness and insensitivity of governance of Nigeria. The revised subsidy provision of about N700bn in 2012 budget may in fact be inadequate if the sum of over N2 trillion controversially paid out in 2011 is more accurate. Indeed, the Governor of Central Bank, Lamido Sanusi and the joint Coordinating Minister of the economy and Minister for finance, Dr Okonjo Iweala, have both been reported to express their fear that the 2012 budget provision for subsidy would quickly run out before the end of the year!

ndeed, there will be a short fall in revenue expectation, if international crude oil price falls below the benchmark of $75/barrel and output projection of 2.5m barrels/day is not significantly exceeded. Fortunately, however, crude prices have hovered around $110/barrel for most of Q1 for 2012 and output has remained fairly stable around the budget benchmark. If this trend continues, there will be no need for the government to lose sleep on our capacity to fund increasing subsidy values without the dismal prospect of further increasing our debt burden beyond the current level of about N5 trillion with over

Why fuel prices will always rise and make subsidy inevitable

ver the years, the un yielding price of fuel products in Nigeria has instigated much acrimony between the government on one side and Labour and the people on the other. Fuel prices have risen steadily from less then 50kobo/litre to the current subsidized price of N97/litre; every government, be it military or civilian, has one time or the other had to contend with the threat or indeed a successful call for strike by Labour.

Irrespective of one’s position, federal government annual budgets have always provided for subsidy

N500bn set aside as service charge in this year’s budget. Paradoxically, however, the social welfare of most Nigerians may not see any improvement as the additional export revenue realized from crude prices in excess of the budget benchmark would have been channeled to fund increasing subsidy instigated by the same ‘favourable’ crude market. The reason for such anomaly is quite simple; higher crude prices with outputs in excess of budgets benchmark will create a fortuitous windfall in export revenue; but the higher crude prices, which stimulated the increased revenue, will also translate to higher fuel prices domestically, as crude oil prices and exchange rate fluctuations are the major determinants of domestic fuel prices. Meanwhile, the social and economic instability engendered by the January 2012 fuel strike is probably a red flag that Nigerians will not tolerate another price hike beyond the current N97/litre any time soon. In this event, the lion’s share of increased revenue from higher crude prices will inevitably be absorbed in funding subsidy, with minimal leftover for other social welfare or infrastructural applications. Thus, if unexpectedly, crude prices rise above $200/barrel and domestic fuel price remains stuck below

litre, (at the rate of $1=N160). If on the other hand, as a result of fall in revenue, government finds it expedient to devalue the naira, to, say, N200=$1, then, of course, domestic fuel price will also become N200/litre!, in which case subsidy value might be over N140/litre. However if international petrol prices increase to $1.20/litre, while naira changes at an exchange rate of N200=$1, then it is evident that Nigerians will have to buy petrol at N240/litre with about N180/litre as subsidy if the domestic pump price remains stuck at N97/litre.

N100/litre, then we may discover to our utmost horror that we may have to borrow in spite of stupendous export dollar inflow to fund subsidy. On the other hand, a fall in the output of crude with oil prices also much below the budget benchmarks would not give us respite either, as lower crude oil prices and output would similarly reduce revenue from oil exports. In the event that crude oil receipts account for over 80% of the total government revenue, the impact of a major fall in

In such event, our economy will become trapped between the horns of a dilemma; increasing crude oil prices will produce higher domestic fuel prices, while on the other hand, reducing crude oil prices will lead to devaluation, and inevitable, higher fuel prices still. So either way, we lose as a nation, as in both of the above scenarios, the resultant product is higher domestic fuel prices and steeply rising inflation! Thus, if the fortuitous scenarios of 2007/8, when crude oil prices approached $150/barrel returns, and government cannot adjust price, then subsidy values alone may well exceed 50% of the annual federal budget!! Thus, in the current framework where recurrent expenditure alone already accounts for over 70% of the total expenditure, this would mean that there would be little or nothing left for capital and infrastructural enhancement and inevitably, negative growth in social welfare will become our portion!

crude prices and output could have a disastrous impact on our economy. In fact, government will find it expedient to formally devalue the naira, well below the current rate of N160/$1 if monthly allocations to the three tiers of government are to remain stable in nominal terms.

egrettably, however, naira devaluation would inevitably trigger rising domestic fuel prices and inflation and thereby reduce purchasing power of all income earners. Maybe we can clarify this issue with a simple example; if for the sake of argument the international commodity price of a litre of petrol cost $1, then our domestic price would be about N160/

Nigerians would naturally be alarmed at such a dismal prospect for our economy, but it is unlikely that the current

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CONTRIBUTORS Princewill Ekwujuru Naomi Uzor Providence Obuh LAYOUT

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economic management team can provide a reprieve without a radical departure from the existing framework of CBN’s monopoly of our crude oil export revenue. In other words, it would be impossible for government to cancel subsidy; i.e. dismantle NNPC’s import monopoly without first dismantling the monopoly of the Central bank in the foreign exchange market, where CBN supplies over 80% of all the dollars in the market, while it concurrently maintains its constitutional monopoly of naira issues. However, the seemingly intractable dilemma of crude oil fluctuation and domestic fuel prices will become effortlessly resolved once the CBN directly transfers export dollar revenue to the rightful constitutional beneficiaries without substituting naira allocations at rates of exchange, which are unilaterally determined by the apex bank.

f crude oil dollar receipts are paid to the three tiers of government with dollar certificates rather than bloated naira sums, the resultant impact will be as follows; if production remains constant or in fact, increases, Nigeria would be the beneficiary of increasing dollar revenue. For example if crude oil prices rise to $150/barrel from say $100/barrel, with stable output, our crude exports dollar revenue will rise by at least 50%; this would pitch the increasing dollar receipts against the unchanged naira value in the market and thus strengthen the naira. A stronger naira would mean cheaper domestic fuel prices, so long as international fuel prices remain denominated in dollars. In this event there will, in fact, be no subsidy whatsoever in domestic fuel prices; indeed there will be ample opportunity to impose a sales tax of about 10% and above on the domestic price of fuel. So government will not only save over a trillion naira from non-payment of subsidy but may also be the beneficiary of petrol tax revenue of another one trillion naira as the nominal domestic price of fuel continues to fall with a stronger naira. In the above event we can only hope that our economic management team will see reason and pull our economy back from unyielding economic crisis with a recognition that the current CBNs forex monopoly is the is poison in the system. SAVE THE NAIRA, SAVE NIGERIANS!! C M Y K