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AUGUST 18, 2014

AGIP, GE frustrating local content, gas supply T

BY OMOH GABRIEL

HERE are indications that many international oil companies operating in Nigeria are frustrating government efforts at achieving local content in the oil and gas industry. Manipulations and flagrant disregard of laid-down rules have become the hallmark of their operations across the country.

Agip Oil Company and General Electric have been particularly fingered for their attempts to disregard directives from the Nigerian National Petroleum Corporation, NNPC, in the award of contracts for the maintenance of OBOB/Kwale/ Ebocha gas plants.

Going by various correspondence between Agip, GE, NAPIMS and Arco, the Board of NNPC awarded a five-year contract (2006 -2011) to Nuovo Pignone (now GE) together with Arco Petrochemical Engineering Company Plc, a wholly-owned Nigerian company as the local Technical Partner, for the maintenance of the OBOB/Kwale/Ebocha gas plants. The Nigerian Agip Oil Company (NAOC) allegedly changed the contract terms and awarded the same contract to GE. Arco which was used as a local technical partner was reduced from being a partner to a subcontractor. This, it was gathered, was the beginning of a long chain of improprieties by GE and NAOC against local firms in a bid to frustrate the local content law.

According to documents sighted by Financial Vanguard, within one year of the commencement of the contract, the Niger-Delta crisis erupted and GE expatriate staff had to be evacuated from OBOB/ Kwale/Ebocha. Arco’s engineers and technicians

zIOCs run riot, disregard rules zAn oil & gas installation

took up the challenge and successfully maintained the plants for six months before the crises abated and GE staff eventually returned to site.

In gratitude to Arco for managing the plants in its absence, GE poached 19 of Arco’s engineers and technicians, reduced the scope of Arco’s jobs and introduced third-party firms to undertake part of Arco’s scope of work in the contract with the sole

aim of making it difficult for Nigeria to realise its local content dream as far as Agip and GE are concerned.

But GE in response to Vanguard’s inquiry through a third party TPT said: “What do you mean by Arco staff? We are not poaching anybody. We believe that there are qualified and experienced Nigerians from Continues on page 18

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18 — Vanguard, MONDAY, AUGUST 18, 2014

Cover Story

Vocation and technical education — a key to improving Nigeria’s development (part 3)

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COMMISSIONING: - Nigerian Consul-General in Jeddah, Ambassador Ahmed Umar (left) with MD/CEO, Medview Airline, Alhaji Muneer Bankole cutting the tape during the commissioning of Jeddah Regional office of Medview Airline ahead of Direct Scheduled flights to Saudi Arabia.

AGIP Oil, GE frustrating local content, gas supply all disciplines that can join the GE family. That is why we believe in training, technology and skills transfer. It helps the local economy and it is the right thing to do. “ But when asked why recruiting Nigerians to fill expatriate quota and yet pay them low wages? It said; “See answer to question one”.

On whether it is true that there is a global agreement between GE and Agip Oil? The response was: “I will have to confirm. If you have been following the company ’s recruitment process over time, you will realise every candidate is given equal opportunity.

Each opening is usually placed on the firm’s website.”

The various measures taken

by Agip and GE, it was gathered, created industrial crisis in Arco. Furthermore, GE, in concert with NAOC, even wrote to NAPIMS/NNPC to drop Arco from the contract.

These unilateral improprieties

by GE and NAOC were rebuffed and largely resolved by officials of NAPIMS/NNPC. According to Financial Vanguard investigations, after expiration of the 2006/2011 contract, another long-term contract was expected to be awarded after necessary tender. Pending conclusion of the tender process, an interim or stop-gap maintenance contract is expected to be awarded to the contractor on site, i.e. Arco/GE or Arco as the local company. The objective of this is to keep the gas plants under proper maintenance while a new five-year contract is being processed. After inconclusive rounds of discussions on prices for the stop-gap contract by GE and Arco with the JV Partners (NAPIMS/NAOC), NAPIMS asked GE and Arco to individually submit quotes.

NAPIMS, it was gathered, found Arco’s quote lower than GE's. Because of Arco’s proven ability to carry out the job alone, a feat it achieved in 2007 when C M Y K

GE withdrew its expatriate staff from the gas plants for a period of six months at the peak of the Niger-Delta crisis, NAPIMS directed the handing over of the plants to Arco for maintenance for six months at a rate of $37million per annum.

The job is currently being executed at a cost of $87million per annum by GE with Arco as a sub-contractor.

NAOC, it was gathered, has continued to resist this directive. The resistance as investigation has revealed, is to enable NAOC hand over the maintenance jobs to a Nigeriabased Italian-managed company called Plantgeria Co. Ltd.

The question industry players worried about the development are asking is: If $10million can realistically carry out the maintenance contract, what has been happening to the difference between GE’s $87million annual cost and proposed Plantgeria’s $10million annual price quote? The whopping difference of the sum of $77 million per annum translates to an excess charge of $154million since January 2012. Or, is this new quote a strategy to bring Plantgeria into the contract and NAOC will later change the terms to the status quo? All these are the

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Continues from page 17

The question industry players worried about the development are asking is; if $10 million can realistically carry out the maintenance contract, what has been happening to the difference between GE’s $87 million annual cost and proposed Plantgeria’s $10 million annual price quote?

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According to NAOC’s logic, Plantgeria can do the job at a cost of $10million per annum.

But investigation has shown that Plantgeria has never carried out any rotating equipment maintenance before and is therefore incapable of appreciating the enormity of the job. This, it was learnt, is being contrived by GE to enable it continue to maintain its positions of expatriate personnel in the plants based on the offshore treaty between GE and ENI/NAOC. The plan, it was gathered, is for GE to invoice directly to NAOC for these services. As a result, the effective cost of the stop-gap contract will be much higher than Arco’s quote of $37million. Some of these facts are said to be hidden from NAPIMS.

fears of NNPC/NAPIMS officials who have continuously insisted on fair play to the greatest resistance of NAOC. NAPIMS had on June 13, 2014 in a letter signed by Jonathan Okehs, Group Managing Director NAPIMS, written to NAOC stating: “We hereby reaffirm the position of NAPIMS management as follows: that NAOC proposal to execute an interim award contract with Plantgeria for a replacement tender of which award recommendation has not been presented for NNPC Board consideration and approval is declined and not approved; NAPIMS will not support any cost expended on NAOC Continues on page 19

n entrepreneur is a person who makes plans for a business or a piece of work and gets it going. Anyanwuocha (2001) observes that the entrepreneur is the chief coordinator, controller and organiser of the production process. The entrepreneur combines other factors of production (land, capital and others) in such a way as to obtain maximum production of goods and services at minimum costs.

In order to effectively enhance occupational skills in the present day, entrepreneurs need also to acquire information and communication technology knowledge and skills. Mkpozi (1996) observed that a country that is developing and manufacturing its own goods either from Hi-Tech or small/ medium scale industries using indigenous skills and exports some of those goods to other countries is usually economically stable. This could be better achieved through the acquisition of entrepreneurial and occupational skills in technology and vocational education. Individuals with technical and vocational skills and good knowledge of ICT are characterized by self-reliance, self-employment and fit properly into today ’s technical, entrepreneurial and business world.

The entrepreneur should therefore possess technical skills, ideas and management skills which are necessary for the success of the venture. One of such skills is information and communication technology which is characterized by employee empowerment and involves the making of unskilled and semiskilled workers to be skilful and functional in today’s world of work. It also involves the development of taskoriented team of workers who no longer depend on individual managers for all their decisions to achieve targets. Technical process re-engineering are also required to redesign technical work processes, jobs, organisational structure, management system, and also in process designs in manufacturing industries.

These components of ICT have great implications for the enhancement of entrepreneurship education in technology and vocational education field of work.

According to Azuka, Nwosu,

Kanu and Agomuo (2006), classroom behaviour must align with ICT-driven environment which is constantly shaping and reshaping the work place and consequently, what is learnt and how learning takes place.

There are various numbers of opportunities for technology and vocational education graduates with entrepreneurship skills in ICT-driven technical and vocational education environment.

These opportunities exist in various forms for enhancing entrepreneurship skills.

Nwabuona (2004) views entrepreneurship education as the identification of the general characteristics of entrepreneurs and how potential entrepreneurs can be trained in management techniques needed for effective performance of persons for long time survival of an organisation after the acquisition of occupational skills. Therefore, the roles of technology and vocational education in enhancement of entrepreneurship skills is to identify and equip graduates with critical wealth of skills, technical knowledge, and a good measure of selfconfidence using information and communication technology competence.

The entrepreneur should therefore possess entrepreneurial and management skills which are necessary for the success of the venture. Ogalanya in Nwabuona (2004) identified entrepreneurial skills to include managerial or administrative skills, job/ technical skills, human relations skills, innovative/ enterprising skills, competitive skills, communication skills, conceptual/planning skills, supervisory/guidance skills, according skills, investigation/problem solving skills. Ohakwe (2003) observed entrepreneurial skills as banking transactions, internet concepts and skills, internet websites knowledge and skills. An adequate knowledge of these concepts, skills and internet competences certainly is an asset to technology and vocational education graduates in today ’s ICT driven world.

Vanguard, MONDAY, AUGUST 18, 2014 — 19

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HE disclosure on Thursday last week that Nigeria is now importing Low Pour Fuel Oil (LPFO) is, to say the least, alarming. The way the country is going, very soon Nigeria will be importing water that is abundantly available in the country. Nigeria in the recent past used to export LPFO to generate foreign exchange. But today, many industries in the country are said to be importing LPFO. LPFO is mainly used in industries as fuel for generation of power or for firing their heaters.

Allocation of the product was made to industries through marketers when the refineries were fully operational. LPFO at the time was mainly exported but now, the country has to helping the power sector offset resolve the outstanding issue.

The question is: Where are import the product. In a country the N25 billion inherited by the the results of similar power firms from the PHCN where power supply is erratic and insufficient, industries legacy firms that has become a interventions in the past? resort to use of gas and LPFO challenge to increasing gas There was intervention in textile, aviation and SMEs? supply for power generation. to generate power.

The Committee said: “Today, What is the state of these Unfortunately, a country that is blessed by God with there are enough incentives for sectors as of today?

Most industries in Nigeria abundant crude oil and gas the gas companies to produce cannot find its feet to produce gas and that is necessary rely on gas supply and LPFO enough gas and LPFO to power because when you look at the 26 to power their plants as public industries. Yet, Nigeria is generating stations in Nigeria, power supply has become a aspiring to become a leading they are all gas-dependent. So standby thing, are now economy among the comity of we feel that is one major suffering as a result of nations. Dangote Cement PLC incentive that would help the inadequate gas and LPFO which raised the alarm over gas companies to begin to supply causing them to continued short supply of gas produce locally. Another and LPFO in the country said incentive has to do with the very clearly that the situation legacy debt. The legacy PHCN has gone from bad to worse in had accumulated about N25 the last six months. Lamenting billion and the gas companies the shortage of gas and LPFO have always been agitating that supply in the country, Mr the debt be paid otherwise they Devakumar V G Edwin, would not produce so as not to Managing Director, Dangote begin to accumulate new debts.

Cement said that if the situation The Bankers’ Committee is produce far below their is allowed to continue much willing to support an initiative installed capacity. If firms in longer, it will have adverse where a special purpose vehicle the real sector are not effect on industries and the (SPV) would be set up that producing enough to meet recently privatised power sector. would provide loans to clear local needs, Nigerians will But Nigerian officials who play that debt and over time, the continue to depend on import to the gallery would always loans would be recovered from for a long time to come. From want Nigerians to believe that the multi-year tariff order what is happening in the everything is working and that (MYTO) and direct deductions." country now, the most there is hope that things will This is a trap that would enslave unfortunate of it all is the fact electricity consumers by the that LPFO which was supplied soon improve.

While Dangote Cement banks in an effort to recover to industries from Kaduna and officials raised alarm over the their loans. Nigerian banks do Warri refineries is now being non-availability of gas, the not have long-term capital to imported by companies. Why Bankers' Committee through invest in long-term projects. is Nigeria going round in Jubril Aku wants Nigeria to Setting up a special purpose circles? Why can’t Nigeria get believe that the banks will vehicle by the banks will be a just one good head as a leader come to the nation’s rescue by short-term measure that will not to break this jinx? Importation

When will Nigeria gain economic freedom? of fuel and other things that can be produced locally is appalling and disheartening.

Where is this government's gas master plan? When are Nigerians going to begin to see results? Motions without movement of various administrations in this country is sickening.

Nigeria recently privatized the power sector. The generating companies made huge investment in the various power plants but unknown to many, gas supply will become

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Let Nigeria refineries begin to work; the National Assembly should open up the oil sector to private investment by passing the PIB bill

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a hindrance to moving forward. Today, many are struggling to pay through their noses. The privatization raised the hopes of Nigerians on regular power supply, but that is now far-fetched as hope for gas supply looks very dim.

Many of the powergenerating companies (GENCOs), are already facing difficult times as a good number which borrowed money from banks are finding it difficult to meet their obligations to the banks because they cannot generate enough power due to lack of

gas. Some of the loans taken by these power operators may go bad and the Asset Management Corporation of Nigeria (AMCON) may be called upon to buy off these nonperforming loans in banks. But AMCON has already foreclosed further purchase of nonperforming loans in Nigerian banks.

Failure of these loans to perform portend great danger to the banking industry and the economy as a whole. If the situation is not nipped in the bud, another round of banking crisis may rear its ugly head with its attendant consequences. Every Nigerian should be concerned at this development as it will hinder the prospects of job creation and further compound the unemployment situation in the country. The unemployment situation in the country is already bad but this situation may cause companies to begin to retrench workers and push more Nigerians into the labour market. So the nation must be prepared for more robberies and militancy by youths from across the country.

Let Nigeria's refineries begin to work. The National Assembly should open up the oil sector to private investment by passing the PIB bill, and then Nigeria will be free from the shackles of the greed that has held the nation to ransom.

Cover Story Continues from page 18 maintenance service contract for gas turbines and related equipment for OB/OB, Ebocha and Kwale gas plants arising from NAOC execution of such services with Plantgeria; and that NAOC should immediately commence negotiations with Arco Petrochemical with a view to awarding a six-month stopgap contract using the manpower loading that was approved for 2013 stop-gap contract, etc.

Although Agip was unwilling to speak on the issue in a letter to GED, NNPC dated 23rd April and signed by Massimo Insulla, Vice-Chairman/ Managing Director, NAOC, it said: “We refer to the letter NAP/ GD/GM/84 dated 14th April 2014 (attachment 1), through which NAPIMS has maintained its earlier position of awarding a six-month interim contract for the subject service to Arco Petrochemical

AGIP Oil, GE frustrating local content, gas supply Engineering Company Limited (“Arco”) as against NAOC’s recommendation, communicated via letters CAB/SPR/ABJ/ L004921/14 dated 18th March 2014 (attachment 2) and CAB/ SPR/ABJ/L004804/14 dated 14th February 2014 (attachment 3) respectively to NAPlMS to utilise the result of the concluded tender for a replacement contract.

This is following exchange of several letters between NAPIMS and NAOC on this matter.

NAOC is therefore left with no other option than to seek the intervention of your esteemed office in the matter based on the reasons enunciated hereunder.

The JV Partners awarded the contract for the global maintenance of the rotating machines in OB/OB and Kwale Gas Plants to GE International Operations Nigeria Limited (GEION), with Arco being a

technical partner to GEION in June 2006 after a tender exercise. The contract had a mobilisation period of two months and duration of four years plus one year optional extension. The overall duration expired in October 2011. On expiration, the JV Partners awarded a one year stop-gap maintenance contract to GEION, based on the then existing framework agreement between GEION and Arco, till December 2012 and consequently agreed to commence a tender for a replacement contract in early 2012. Due to the prolonged tender timeline caused by the complexity of the service and the need to fully comply with NCDMB and JV requirements, GEION, with Arco being a technical partner, was further engaged under a renewed stop-gap contract till

the end of 2013. During the said 2013 stop-gap contract, the JV Partners made concerted efforts to bring down the maintenance cost by impressing on GEION to increase Arco’s work allocation in the framework agreement between them and reduce the applicable prices.

The various negotiation meetings held between the JV Partners and GEION/Arco in Lagos and Abuja in respect of said JV Partners’ target could only achieve a new GEION/ Arco framework agreement wherein Arco had a better share, but with not much impact on the maintenance cost.

Consequently, it was jointly decided by the JV Partners to channel more energy to the conclusion of the tender for the replacement contract that was already at a technical evaluation stage then.

“We wish to point out that the

JV Partners (NAOC/NAPIMS/ POCNL) have already jointly concluded the tender process for the award of the said replacement contract to the bid winner, Plantgeria Nigeria Limited.. As required under the JOA, NAOC (as operator) has by its letter dated 24lh January, 2014 requested NAPIMS and POC (N)L approvals to award the contract to the bid winner.

A copy of the said letter is enclosed herewith for ease of reference, While NNPC Board’s approval to award of the contract to the bid winner is being awaited, NAOC as operator has recommended that a stop- -gap contract for the required services be awarded to the bid winner, Plantgeria Nigeria Limited.

However, NAP1MS has insisted that NAOC should

Continues on page 20 C M Y K

20 — Vanguard, MONDAY, AUGUST 18, 2014

Business & Economy

BoI assures funding machinery from FIIRO Olam subsidiaries support society for the blind

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HE subsidiaries of Olam International in Nigeria’s Food and Beverages sector, weekend, supported the “fitness for the Blind walk”, a yearly event organised by Nigeria Society for the Blind.

Some of the subsidiaries of Olam in the packaged food business environment in Nigeria that featured during the walk include, Olam Sanyo Foods, Ranona Limited and OK Foods.

In a statement, the company said, “We will not relent in our efforts in making our contributions to the society.

This year ’s event has been well supported by various subsidiaries of Olam International.” The company also reaffirmed its commitment to customer satisfaction adding that, it would not relent in its effort of providing quality products to meet the everchanging needs of consumers.

Chairman, Nigerian Society for the Blind, Mrs. Biola Agbaje, said, “We have had incredible support from some corporate organisation who have come out to support us, as we are a totally voluntary organisation so the more help we can get the better.

Consumer Brands Award holds next month

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he organisers of Consumer Brand Awards, weekend, said they will host this year’s edition on October 18th at the Sheraton Hotels in Abuja.

The award is being organized by Consumer Campaign Foundation in collaboration with ConsumerGuide Nigeria to showcase consumer-friendly brands for the year.

In a press statement, Mr. Musa Polycarp , Chairman of the Committee, said “the awards are coming at a time when most manufacturers or service providers have cultivated the habit of short changing the average consumer, by way of marketing or selling sub-standard products and services”.

On the credibility of the award, Musa said “those to be awarded are the high flyers, who have stuck to the provision of high quality products using high standards at achieving the end product churned to the consumer”.

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By FRANKLIN ALLI

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HE Bank of Industry (BoI) has assured industrialists in the country of funding support if they purchase equipment fabricated by the Federal Institute of Industrial Research, Oshodi (FIIRO).

Rasheed Olaoluwa , Managing Director/Chief Executive of BoI, gave the assurance when he visited the management of FIIRO in Lagos. “Rather than appeal to industrialists to utilise FIIRO’s inventions, we will support those who come to take up equipment from FIIRO,” he said.

He disclosed that the bank was in the process of procuring the services of professional Business Support Service Providers (BSSP) and urged FIIRO to key into the initiative in order to help prospective loan seekers acquire information and develop bankable applications.

“One of our key strategic development initiatives is to pursue linkages between industrialists and centres of innovative development solutions that can produce indigenous and low cost

technology that would help accelerate growth industrially,” he said.

He pointed out that in every state of the country, Nigeria has at least one agricultural product that can be focused on for commercial and industrial development and that industrialisation based on agriculture will make a lot of

impact on the population.

He said that the bank and FIIRO were in alignment in helping to create jobs and assured the researchers of BoI’s support in terms of collaboration; informing and sensitising Nigerians; the promotion of developed technology through exhibition and other avenues

to ensure their visibility and availability.

“It is essential to build capacity for accredited equipment fabricators to improve our local technology by making it more effective, attractive and low cost in order to also encourage the youths to participate in Nigeria’s industrial revolution in this digital age,” he said.

AGM: From left: MD/CEO, UBA Asset Management Limited, Mrs Modupe Mujota; Head, Legal/ Trust Services, Union Trustees Limited, Mr. Ekom Umossoh; Group Counsel, UBA Capital Group, Mr. Leo Okafor , at the 7th Annual General Meeting of UBA Mutual Funds, managed by UBA Asset Management Limited, held in Lagos.

COVER STORY

AGIP Oil, GE frustrating local content, gas supply Continues from page 19 negotiate with Arco with a view to awarding the stop-gap contract to Arco, and not the bid winner. As we have clarified to NAPIMS, it would be improper to implement NAPIMS’ present request for the following reasons that it would be against procurement due process to negotiate with, or award a stop- -gap contract to Arco, since Arco participated in the tender process and did net win.

Awarding the contract to Arco, for whatever duration, will call to question the integrity of the tender process, and it cannot be justified internally to JV Partners’ respective stakeholders and externally to the oversight authorities who may subject this matter to scrutiny.

Such award to Arco may also expose the JV to needless legal claims from other companies that participated in the tender process, with the attendant costs/adverse reputational implications for the JV Partners and possible stoppage or stalling of the maintenances services which are critical for the JV operations.

Awarding the stop-gap contract to Arco, which is a sub-contractor to GEION that is the original contract owner, may result in litigation between GEION and Arco in which JV Partners could be joined as parties, with potential

consequences similar to those highlighted in point two above.

In addition, acceding to NAPIMS’ request will make the JV Partners to incur higher cost, which is against the JV’ Partners’ objective of cost saving. The cost of the bid winner is approximately US$10,000.000 per annum as against Arco’s estimated cost of between US$35,000,000 and US$40,000,000 per annum as derived from the final quotations submitted last year. It is, therefore, more beneficial to the JV Partners to award the interim contract to the bid winner, Plantgeria Nigeria Limited, and not Arco.

However, the minutes of a meeting of the JVC and the contractors March 8, 2013 had stated that the JV Partners reiterated that they want the negotiation between GEION and Arco to be concluded as soon as possible so that the stop-gap contract can be closed out. In response, GEION made a presentation to the meeting which highlighted its proposal for the intended structure for the stop-gap contract as well as the number of units that it will cede to Arco. However, some issues came up from the presentations, which are: The total number of eight (8) units proposed by GEION to cede; to Arco was considered by the JV partners to be inadequate

to bring the price of the contract down to comfortable level; GEION’s modality for ceding the units to Arco/ is two (2) machines per quarter, if GEION is “satisfied” with Arco’s performance.

This was unacceptable to both the JV Partners and Arco; Arco expressed its preference for the whole nine units (9) located at Kwale instead of the 8 units on scattered locations.

The reasons adduced for this are efficient and effective coordination of operations; better interface management; accountability of KPI; and reduced interference. The JV Partners requested again that GEION and Arco should further engage themselves in negotiations and report back to the JV Partners by Friday, March ’15, 2013. While positions were being canvassed on the best way to move forward, the Leader of GEION’s Team got up and said emphatically that none of the units in the gas plants would be ceded to Arco for sole maintenance. In his own words, “GE will never; I say “never!” cede any of the plants to Arco.”

Another representative of GEION informed the meeting that “ENI and GE have a global agreement already in place that will make it impossible for GE to give Arco any of the plants to maintain.”

At this point, the representative of Agip immediately chided

GE’s representative for revealing the existence of the global agreement between their two companies that would prevent Arco from taking over the maintenance of any of the units of the gas plants. In anger, he told the GE representatives: “Shame on you!” As it were, Agip and GE now have to settle their own score on the matter.

Industry players are of the view that “the global agreement between Agip and GE is the root cause of the project management issues between GE and Arco on the one hand and Agip and Arco on the other. It shows clearly that there is no responsibility in the global arrangement to grow the local company by GE or Agip. Cost reduction expected by the JV for the stop-gap contract would be a challenge to meet if GE in their global arrangement with Agip, is designated the sole source for all spares, even for non-GE equipment. Any such global arrangement is suspect in price gouging and wringing.

There is no reason for this sole source since OEM parts of all equipment are available at competitive prices and delivery schedule from licensed agents around the globe.

By extension, the global understanding between GE and Agip would appear to undermine the credibility of the NIPEX Tender process which is being used in procuring the next GMS contractor. We do not think bidders for the on-going GMS

Vanguard, MONDAY, AUGUST 18, 2014 — 21

Business & Economy

CBN gives banks Dec 31 deadline on funds transfer status

BY PETER EGWUATU

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HE Central Bank of Nigeria, CBN has given banks operating in the country up to December 31, 2014 to achieve “Highly Secured Online Funds Transfer” status.

The CBN, in a circular signed

by Director, Banking & Payments System Department, Mr. Dipo Fatokun, released yesterday, titled “ The Review of Operations of the NIBSS Instant Payment (NIP) system and other electronic payments options with similar features” stated that the decision was taken to further strengthen the risk aversion measures put in place for the operators of the Nigeria Interbank Banks Settlement System, NIBSS Instant Payment System, and other electronic payments options with similar features.”

Under the Highly Secured Online Fund Transfer, the apex bank stated that Daily Limit for instant Value for Individual is N1 million, while Corporate is N10 million; The Daily Limit for Next Working Day Value for Individual: N10 million and Corporate: N100 million.

According to Fatokun “ Limit of N1 million (Instant value) and N10 million (Next day value) shall be applied for NIP and NIBSS Electronic Fund Transfer, NEFT respectively, and other electronic payments

options with similar features, initiated by individuals, with effect from September 1, 2014.

There shall be no limit on the amount that can be received into a customer’s bank account from the platform. For same day value (NIP), the maximum amount that can be transferred by an individual (cumulative) is N5 million.”

The guidelines further stated that a customer shall issue a written indemnity to the bank,

where they chooses to initiate transactions above the limit specified in the Highly Secured Online Fund Transfer, subject to maximum of N5 million and N100 million for Individual and Corporate customers respectively.

Other conditions in the guidelines is that “ Banks are to establish internal procedures /policies for variants of the N5 million limits; Transactions above the N1

million limit could be delayed by the receiving bank for not more than one hour (as opposed to the current two minutes), before applying credit.”

According to the guidelines “ Transfers above N100 million shall be effected through the Real Time Gross Settlement System (RTGS). Banks are expected to return unapplied funds within 10 minutes, where their fraud/risk management system flag such as suspicious or fraudulent and Banks are also expected to communicate the aforementioned policies clearly to their customers and give adequate notice before implementation.”

MEETING - From left: Mrs. Tokunbo Martins, Director, Banking Supervision Department, Central Bank of Nigeria, CBN, Mr. Jibril Aku, MD/ CEO, Ecobank Plc; Mr. Herbert Wigwe, GMD/CEO, Access Bank Plc; at a meeting of the Bankers’ Committee held in Lagos.

New BDC requirement : CBN’s silence stirs apprehension in forex market

By BABJIDE KOMOLAFE

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HERE is widespread apprehension in the foreign exchange market following the continued silence of the Central Bank of Nigeria (CBN) on the number of Bureaux de Change (BDCs) that have met the new requirements announced on June 23rd.

Vanguard investigations however reveal that about 2,385 existing BDCs have so far met the new requirements.

Investigation revealed that most banks are not selling foreign exchange to BDCs due to uncertainty about their compliance with the new requirements. BDC sources who spoke to Vanguard on condition of anonymity confirmed that the banks said they would not sell dollars to BDCs until the CBN announces the list of BDCs that have met the requirement.

This has however aggravated

* 2,385 BDCs meet new requirements

the scarcity of dollars in the market, leading to further depreciation of the naira in the parallel market last week. The parallel market exchange rate on the average rose further to N173.5 per dollar. This implies that the naira has depreciated

by N8.5 or 5.1 percent since new requirement was announced on June 23rd.

The new requirements for BDC operations include 250 percent increase in minimum capital base to N35 million, and an increase in the mandatory caution deposit from $10,000 to N35 million.

While announcing the new requirement in a press release on June 23rd, The CBN said that the new requirements were to correct observed deficiencies in the operation of Bureaux de Change (BDCs) in Nigeria which have led to gross inefficiencies and sharp practices in the foreign exchange market, has taken

steps to check the growing incidence of rent-seeking, depletion of external reserves, financing of unauthorized transactions and dollarization, among others.

“The CBN’s expectation is to have BDCs that are properly structured, effectively regulated, and well-capitalised to meet the objectives for which operators are licensed. In particular, the CBN envisages the following: The emergence of well-capitalised and structured entities that can effectively perform the roles of Bureau De Change in the economy; Partnership between BDCs and renowned companies engaged in inward and outward money transfers in Nigeria. It is in expectation of this collaboration that the CBN as at 18 June 2014 approved the “Guidelines for International Money Transfer Services in Nigeria”. Under the Guidelines, Western Union,

Moneygram and RIA Financial Services have been authorised to carry out inward and outward money transfer services in Nigeria; Creation of robust and sustainable business franchises that are not dependent on rentseeking activities but are properly situated to compete in the foreign exchange market, and deliver superior values and returns.

“In view of the background and vision provided above, and in order to ensure that only genuine companies operate as BDCs in Nigeria, the CBN makes the following modifications to the “Bureaux De Change Guidelines”: “The minimum capital requirement for the operation of BDCs in Nigeria is reviewed to N35 million; The mandatory cautionary deposit is reviewed to N35 million and shall be deposited in a non-interest yielding account in the CBN upon the grant of Approval-in- Principle.

Ebola threatens West Africa GDP as companies slow production

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HE world’s worst-ever outbreak of Ebola will inflict economic damage on the West African countries of Guinea, Liberia and Sierra Leone as companies from Sime Darby Bhd to ArcelorMittal scale back operations.

Commercial and transport disruptions that will probably last for at least the next month, along with increased health expenditure, may put pressure on budgets, jeopardising the nations’ economic growth, Matt Robinson, a senior credit officer at Moody’s Investors Service, said in a report.

Sime Darby, the world’s largest listed palm oil producer, said it is slowing output in Liberia. ArcelorMittal, the world’s largest steel producer, said the spread of the virus has delayed expansion plans at its Liberia plant. Sifca Group, the Ivory Coast-based agribusiness, said it halted rubber exports from Liberia.

MTN Group Ltd., the largest wireless carrier in sub-Saharan Africa, said five expatriate workers left Liberia as a precautionary measure.

Dangote Cement plans expansion to Middle East, Latin America

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angote Cement Plc is warming up to expand its cement production plants beyond the continent of Africa to the Middle East and Latin American countries.

The company is optimistic that the planned investment will propel it to be ranked among the top ten global cement manufacturers.

“We are currently operating in fourteen African countries and we shall soon move across the continent to other continents.

By the time we have consolidated our hold in Africa markets, we shall go beyond the borders. Specifically, we are targeting the Middle East and Latin market. The idea is to be a world leader in cement production,” said Sunday Adondua, Deputy General Manager, Production, Ibese Plant.

He further disclosed that in addition to their cement plants in South Africa, Cameroun, Zambia, Kenya; Senegal, Tanzania and Ethiopia, “ We are also planning to start a plant in Guinea Bissau, Mauritania, and we are also planning projects in Gabon.”

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22 — Vanguard, MONDAY, AUGUST 18, 2014

Tax Matters

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axation, worldwide, constitutes a major source of revenue to governments for funding their capital and recurrent expenditures. In recent times, there has been the urge for tax authorities in Nigeria to carry out spontaneous and sporadic tax audits and investigations on taxpayers, especially corporate bodies, suspected of tax evasion or tax delinquency.

In doing so, the tax authorities, in discharge of their duties as contained in the enabling tax laws, adopt various methods in tackling taxpayers. The taxpayers, on the other hand, are quick to resist any additional tax burden that might drain their pockets.

While tax authorities do have statutory powers to conduct tax audits and investigations on taxpayers to ensure that the revenues due to government are not lost by way of false returns, these powers are, however, not without legal limits.

Tax audits and investigations are very complex and tasking processes and as such, tax managers and their consultants must understand the ‘rules of the game’. On the other hand, according to the Federal Inland Revenue Service (FIRS), minimum tax is justifiable on the premise that every asset generates income.

The minimum tax regulations are therefore anti-tax avoidance measures whether or not the affected company declares a profit, or the company was dormant during the relevant year of tax assessment.

Where a company is dormant, minimum tax is usually charged on the company’s net assets or on its share capital, whichever is the higher of the two.

Meaning of Audit An audit is an examination usually by an independent person, on a set of the accounting books, records, documents, etc, from which a financial statement has been prepared and/or an examination and verification of a company’s financial and accounting records and supporting documents by an independent party after which an opinion is given on the state of affairs of such books and records.

Objectives of Statutory Audit The primary objective of audit is to express an opinion on the financial statements of an enterprise as to whether: Proper books have been kept, The financial statements are in agreement with the books, The requirements of the applicable legislations, for example, the Companies and Allied Matters Act (CAMA) 1990 (as amended) have been complied with, Applicable accounting standards (both local and international) have been

Tax audit and minimum tax computation complied with, The financial statements give a true and fair view of the state of the financial affairs of the enterprise as at its balance sheet date, The financial statements give a true and fair view of the result of the operations of the enterprise for the period under consideration.

Tax Audit This is an additional audit to the statutory audit and is carried out by tax officials from relevant authority. The approach and scope of work would be slightly different from that to be carried out for an audit under CAMA, 1990.

Objectives of Tax Audit The objectives of tax audit are to enable the tax auditors determine whether or not: Adequate accounting books and records exist for the purpose of determining the taxable profits or loss of the taxpayer and consequently the tax payable, The tax computations submitted to the authority by the taxpayer agree with the underlying records, All applicable tax legislation have been complied with, Provision of an avenue to educate taxpayers on various provisions of the tax laws, Discourage tax evasion, Detect and correct accounting and/or arithmetic errors in tax returns; provide feedback to the

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By GIDEON BITRUS

matter relating to entries in any books, documents, accounts or returns as the Service may from time to time specify in any guideline.” An integral part of the self-assessment scheme is the need to periodically verify the tax returns filed by taxpayers through tax audit procedures. The tax audit exercise essentially is meant to enable the revenue authority to further satisfy itself that audited financial statements and the related tax computations submitted by the taxpayer agree with the underlying records.

Types of Tax Audit The scope and type of audit steps to be executed would depend on the type of audit to be performed, the underlying trigger and the objectives to be achieved. At present, FIRS is

Tax audits and investigations are very complex and tasking processes and as such, tax managers and their consultants must understand the ‘rules of the game’

management on various provisions of the law and recommend possible changes, identify cases involving tax fraud and recommend them for investigation, Forestall a taxable person’s failure to render tax returns, Forestall a taxable person rendering incomplete or inaccurate returns in support of the selfassessment scheme.

Powers of FIRS to Audit Prior to the introduction of the self-assessment scheme, there was no specific provision in Companies Income Tax Act (CITA) for tax audit. Subsection 4 of Section 43 was introduced to empower FIRS to carry out tax audit. The sub-section states: “Nothing in the foregoing provisions of this Section or in any other provisions of the Act shall be construed as precluding the Revenue Service from verifying by tax audit any

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involved in the following types of audit: Registration Audit – The purpose of this audit is to bring all relevant companies and individuals into the tax net. The audit involves obtaining information on businesses from the Corporate Affairs Commission (CAC), the Nigeria Customs Service, other third parties and routine visits to premises of suspected nonregistered taxpayers in order to ensure that all companies and individuals who fall under FIRS’ tax jurisdiction are properly registered. In some cases, information in this regard can be obtained from other FIRS departments who may alert the Tax Audit Processes and Policies Department on the need to carry out registration checks regarding certain companies and individuals who are outside the FIRS tax net. At the

end of each registration audit, companies and individuals found to be outside tax net are usually registered and given Taxpayer ’s Identification Number, and a Permanent Note Jacket file is opened Advisory Audits - A visit to newly established businesses advising them of their obligations in terms of tax types, filing of declarations and payment of amounts due, records to be maintained and likelihood of audit if it is considered to be a risk and the sanctions that might apply for non-compliance. Obtaining information on newly registered companies from CAC and visiting their offices to advise them of their obligations under the law.

Record Keeping Audits - A check on enterprises that may have a reputation of not keeping adequate records. The visit would point out the obligations of the taxpayer as provided for in the CITA Section 63 regarding the keeping of records. Penalties are to be computed in line with CITA Section 92.

Desk Audits - Audits will generally require field visits.

However, it may be possible to undertake some basic checks from the tax office. These can be conducted with regards to specific issues of a small enterprise when the auditor is confident that all necessary information can be ascertained by conducting the examination in the office. They can also be used as a preliminary examination of declarations/ returns, analyzing ratios and cross-checking information to determine if an audit is warranted.

Single Issue Audits – These are quick response audits with a narrow focus. Their limited objectives focus on a single tax type or a single period concerning an individual taxpayer as opposed to the comprehensive audit. For instance, FIRS may only be examining whether the taxpayer has met their obligations in respect of employment – Pay-As-YouEarn, Withholding Tax (WHT),

and Value Added Tax (VAT) or Company Income Tax (CIT).

Refund Audits – Verifying the taxpayer’s right to a refund prior to processing the refund in accordance with the provisions of Section 23 of the FIRS Establishment Act. Therefore, audits are usually undertaken for the first refund claim as well as where the refund claims varies significantly from established patterns and trends.

Audit Projects - Audit can be organized as a separate project for specific groups of taxpayers or tax types (e.g. VAT, WHT) on a regional or national scale.

These projects may cover an industry (e.g. construction) or a line of business (e.g. retail) and/or certain items from the declaration or profit and loss account (e.g. capital allowance). They will consist of specific checks and are used to address a particular risk or to establish the degree of noncompliance in a particular sector.

Comprehensive (or full) Audits – All tax obligations over one or more tax periods are typically referred for extensive examination when discrepancies are uncovered during more routine single issue audits. As they are usually time consuming, comprehensive audits should only be applied to taxpayers when there is evidence of underreporting that will have an impact across taxes.

Mergers and Acquisition Audits – As part of mergers and acquisition strategies, it is usual for companies involved in the process to investigate their potential partners. Such investigations are undertaken by independent professional accountants and lawyers on behalf of the parties involved.

A tax audit shortly after a merger or an acquisition has enormous potential for audit yields as the new entity ’s financial statements would often materially differ from its previous components.

Public Offers Audit – Securities and Exchange Commission rules require companies involved in a public offer to disclose their financial history covering a period of at least five years to the investing public. Again, professional accountants, lawyers and other professionals usually carry out a number of investigations in order to provide for public disclosure the information required to be disclosed by the regulatory authorities. A tax audit shortly after a company has made a public offer has enormous potential for audit yields.

Vanguard, MONDAY, AUGUST 18, 2014 — 23

Banking & Finance

By PETER EGWUATU

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he newly elected President of Chartered Institute of Stockbrokers, CIS, Mr. Albert Okumagba is a proven technocrat, an astute financial services professional and a strong advocate of good governance. HE is the Group Managing Director/ Chief Executive Officer of BGL Plc. He is also the Chairman of BGL Securities Limited, BGL Asset Management Limited, BGL Private Equity Limited, I-skill Limited, and Immersion Marketing Strategies (IMS) Limited, as well as a member of the board of directors of NASD Plc. Prior to joining BGL ,he was Manager and Head of Mergers and Acquisitions at Centre-Point Bank Plc (now Unity Bank Plc). In this interview with newsmen, he spoke on a lot of issues affecting the financial markets and how his administration intends to reposition the institute.

As the new President of CIS, are there things that you want to address immediately in order to reposition the institute?

I would like to improve national savings mobilization for critical investment growth and to expand the participation rate of Nigerians in the capital market. Our goal is to expand the access to our certifications by varied but related professionals. We would therefore immediately embark on the expansion of the certification programmes as well as the frequency of the examinations. We would also align the programme to America FINRA and UK CISI curriculums in the light of the unfolding sophistication of our markets. We intend to transform the examinations from paper based to electronic format to expand access at minimal costs to both the institute and members at all levels. The status of CIS as the foremost capital market professional body needs to be enhanced. This requires a combination of brand restructuring and improved access and engagements with stakeholders. In this regards, we will ensure that in the next 18 months CIS moves to a befitting structure that would house our secretariat. This suitability of the institute’s structure would go a long way in having impact on the institute as a brand. We would also embark on brand projects that would situate the institute in the rightful place in the financial market and the Nigerian economy and make it a strong brand across Africa and globally. An important component of this is to work with the National Assembly on the speedy passage of the CISI Bill.

How would you improve the financial strength of the Chartered Institute of Stockbrokers?

The existing sources of revenue to the institute are registration fees, exam fees, sale of study packs and other materials and subscription. We however intend to add to these register of students and existing streams of income and also restructure the fees members.

One, the curriculum and the variety of charged by the body across its various operation stages in certification that the Institute offers are being reviewed with order to make them competitive.

The recent inclusion of diploma a view to making them more attractive and giving potential certifications offer opportunities to enhance members many options.

Secondly, the introduction of financial strength of the institute while expanding the the monthly diploma certification exams for postscope of the institute. We would further expand the diploma secondary school candidates posits significant potential for programme as a tool for revenue expansion. membership expansion. We Furthermore, since there is a are currently reviewing the direct relationship between requirements for registration membership figure and for the Diploma certification revenue, the current effort to further broaden its scope to aimed taking student accommodate other population to 150,000 or more professionals with interest in is another step in ensuring that the CIS programme. This the financial strength of the monthly conduct of Institute is improved. We will examination is to run from sustain this process with September 2014 to August 2015 significant emphasis on the with the requirement being Diploma programme without Secondary School Certificate compromising the integrity of across West Africa. We are also the Institute. expanding the CIS programme You have been talking about beyond the shores of the growing the membership of Country to the West African the Institute, what is your Sub region and beyond in the strategy? long run. In this regard, all the exams will become bilingual A lot has gone into expanding the membership (English & French) with exam centres computerized. It goes base of the institute in the last few months. I will like to list to say that the institute’s certificate becomes easily some of the strategies being implemented to increase the accessible by both Nigerians and non-Nigerians who are names on the institute’s

•Mr. Albert Okumagba, President of Chartered Institute of Stockbrokers, CIS.

We'll enhance national savings, participation in capital market — Okumagba beyond the borders of the nation. Furthermore, a new curriculum scheme patterned after FINRA of America and CISI of the UK is to be launched.

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hat is the attitude of foreign Investors to investment through the Nigerian Stock Exchange in the wake of on-going insecurity situation in the country?

The attractive valuation of the most of the stocks on the Nigerian bourse as well as the

in some parts of the country pose to foreign investment. We are however of the opinion that the earlier we are able to nip this challenge in the bud the better for the Nigerian capital market in the medium to long run. All stakeholders in the market, the SEC, NSE, Trade Groups and of course CIS are also keenly interfacing with foreign investors to allay or clarify risk perceptions.

Under the new regime of Information Technology whereby many dealing member

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The recent inclusion of diploma certifications offer opportunities to enhance financial strength of the institute while expanding the scope of the institute.

very competitive real return of the economy make it difficult for foreign investors to take their attention away from our market. The return potentials as a major frontier market, more than compensate for the risks that the incidence of insurgencies

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firms trade from their offices, is it not possible for a non-stockbroker to trade from an office?

It is not impossible that some dealing members allow noncertified brokers to trade through the remote platform from their offices, it is however

a major infraction of market rules and also exposes such dealing members to risks that are of high magnitude due to high probability of errors. The incentive for an average dealing house to take such risk is very low. The X-GEN, which is the new trading platform used by the NSE, supports seamless remote trading and offers benefits such as direct market access and automated trading by investors through their dealing houses’ online platforms. The X-GEN is highly scalable and therefore able to cater for wider participation by retail participants via various devices like smart phones which are easily accessible. In other words, without compromising the importance of certified brokers, the market has now been further decentralized to investors at different levels.

This democratization of trading is also underpinned by the current tech-savvy and keeneyed SEC which ensures that risk is still properly managed.

What can be done to attract more investors into the Nigerian Stock Exchange?

It is important to note that a lot has been done by the new management of the NSE in recent time that has expanded interest in the Nigerian stock market and would continue to support increased attraction of the market to the rest of investors at home and abroad.

Improved trading platform, market transparency, corporate governance drive and market information are areas the management of the Stock Exchange deserves commendation among others.

Additional incentives in the areas of competitive transaction costs, stricter enforcement of listing and trading rules and regulations, as well as expansion of market depth are other areas that could attract investors to our market.

Do you subscribe to the plan by the National assembly to compel companies to list on a stock market?

Getting companies to list on the exchange is a laudable idea and a good step in the right direction. It is however arguable that forcing companies to list on the Exchange might send a wrong signal on the attractiveness of the Nigerian Stock Market on its own as a beneficial platform for corporates’ capital management. While I recognize that there are sizeable entities outside the market across the oil and gas, telecommunication, fast moving consumer goods (FMCGs) and conglomerates that would deepen the Nigerian capital market by listing their shares on the Nigerian Stock Exchange (NSE). I am of the opinion that the stock market should woo them with incentives that create significant attraction to list their shares without compromising the corporate governance and C M Y K

24 — Vanguard, MONDAY, AUGUST 18, 2014

E-Business Stories by JONAH NWOKPOKU

Alibaba film unit halts share sales over accounting irregularities

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media firm Alibaba Group Holding Ltd recently bought said on Friday a review of its finances revealed possible accounting irregularities, casting doubts on the Chinese e-commerce giant’s due diligence as it prepares for a U.S. initial public offering.

The announcement by Alibaba Pictures Group Ltd comes less than two months after Alibaba Group completed its $804 million purchase of a 60 percent stake in the film and TV production company once known as ChinaVision Media Group Ltd. The deal was among the $10 billion or so Alibaba Group and its affiliates have spent since the beginning of last year on acquisitions which ventured beyond its traditional ecommerce roots to fend off competition from rivals like Tencent Holdings Ltd, Baidu Inc and JD.com.

But the speed at which the group has conducted some of its purchases has raised investor concerns. In June, Alibaba bought China’s most successful football club, the Guangzhou Evergrande, for $192 million in a deal which was hatched over a few drinks.

Facebook to track users across devices to study shopping habits

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acebook Inc will let advertisers know where a promotion was first viewed and when it led to a purchase by tracking users between their electronic devices, a tool that may reignite privacy concerns.

Marketers will be able to see the number of users that clicked on an ad, whether they used a smartphone, tablet or desktop computer, and which device was used to buy a product, Menlo Park, California-based Facebook said in a blog post last week.

Facebook has been bulking up advertising services as the social network’s mobile ads propel revenue and profit.

While users and privacy watchdogs around the world criticise Facebook’s use of personal data, the company is under pressure from advertisers to prove that their mobile promotions are effective.

As Facebook finds new ways to analyze the behaviour of its more than 1 billion users, controversy has emerged regarding its methods.

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IGERIA’s tech entrepreneur, Femi Taiwo has said that his new start-up firm, Washist.com has invested $50, 000, about N8 million to provide laundry services through the internet.

He also disclosed that Nigeria’s singer and entertainer, Lanre Dabiri, LD contributed part of the seed investment for the start-up.

Launched in Lagos last week, Taiwo, a tech entrepreneur who cofounded one of Nigeria’s most successful online real estate businesses, Privateproperty.com.ng, sold

Washist.com takes dry-cleaning online with N8m investment to a South African online real estate firm recently, said Wahist.com was inspired by the need to help professionals who are constrained by their job to attend to their sartorial needs. Speaking to Vanguard, Taiwo said with N10, 000, customers within Lagos Mainland and Island could have as many of their dirty clothes attended to and returned in three days and for three times within one month.

According to him, the business model involves a N10, 000 flat monthly subscriptions.

The customer registers online and supplies his/her details so that Washist agents could come and pick up the clothing and deliver it back in three days.

“WASHIST.COM is simple to use. You just fill in your details which will include name, address, phone number and email, and a Washist will contact you to schedule a pickup of your laundry. Also, you’ll receive email and SMS notifications from Washist on the status of your clothes from pickup to final delivery,” he

AWARDS: - From left: Mrs Adekemi Edema, Head of Legal; Mr Lere Fashola, Publisher/CEO and Mr Oluwafemi Adeboye, Head of Administration, all of Legal Blitz Esq during a press briefing to announce the 2014 ESQ Legal Awards in Lagos.

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ollywood mobile streaming service, Aflix which launched in Nigeria and two other African countries last week, has said that it foresees video-ondemand filling the need for faster and reliable internetservice and driving the Internet market to support industries such as Aflix which is specialised in streaming Hollywood content via Smartphones.

In a chat with Vanguard, Aflix’s Director of Business Development, Nyasha Mutsekwa said Aflix believes that its services will make significant impact on the cinema industry, “since we are offering the latest movies which will be available for viewing right in people’s living rooms.”

He noted that the Internet TV industry is a billion dollar industry that Aflix is looking to revolutionize how content is viewed in Africa.

Contrary to insinuations that the firm’s launch in Nigeria is in response to iRoko TV’s launch of similar service in Africa recently, Mutsekwa said, “We have been working on a solution for Nigeria for over two years now and we are more in

said.

He also noted that, “A laundry bag is provided on your first pick-up. There is no extra charge for pick-up and delivery of your items,” adding that, “the “major challenge faced by most busy professionals is the quality of service offered by their regular laundry service providers. The team has therefore put up its own style with own washing instructions and its trained personnel to ensure clothes are long lasting, looking crisp and smelling fresh.”

Speaking further Taiwo said it is innovation like washist that would continue to drive ecommerce in Nigeria even as the sector has continued to attract foreign direct investment valued at about $50 billion within the past two years.

According to him, convenience coupled with entrepreneurs’ drive to expand market share, reduce cost and increase revenue will continue to play prominent role in the growth of e-commerce in the country. He however decried that poor level of awareness on the benefits of turning to online businesses to meet basic needs and lack of trust inspired by increasing wave of fraudulent activities online has continued to impede the growth of the sector.

Video-on-demand to fill need for faster, reliable internet — AFLIX direct competition with Multichoice’s DSTV since we are focusing on the latest TV shows and movies. iRoko is rather responding to our plan to launch in the market. Our objective is to bridge the Hollywood and African continent market.”

Speaking further on the service, Mutsekwa said, “We are bringing the luxury of theatre going into African homes, at a price point that is affordable. Aflix customers will be able to watch Hollywood

titles, from the classic favourites, to current new releases and Blockbuster hits,” adding that, “With the use of smartphones on the rise in Africa and the reality that movie going is growing, this is the perfect time to launch our product and change the way Africans watch and enjoy their favourite content.”

According to him, when new users sign up for the service, they will be given a fourteen day free trial with no strings attached and after the period,

choose to subscribe for just $9.99, about N1,600.00 a month or opt out totally. Users also get access to pay-per-view content with premium movie rentals starting as low as $2.99, about N480.00. Users can opt to only use the pay-per-view option, simply just renting the titles they want to watch at that

moment. Aflix aims to develop set-top boxes to give users the ‘living room experience.’ By simply plugging in the device into their TV sets, Aflix users can enjoy Hollywood entertainment on their ‘big screens.’

PayPal mulls Bitcoin integration E

BAY Inc’s PayPal is in talks with Coinbase Inc and other Bitcoin transaction providers to integrate the virtual currency within its Braintree payments system, The Wall Street Journal reported last week.

Executives at PayPal, which owns the service that handles payments for startups from room-bookings network AirBnB to caron-demand service Uber, have not struck any agreements, the Journal cited people familiar

with the matter as saying. A deal would be an endorsement for a crypto currency, which is gaining acceptance with a slowly growing number of businesses, including online retailer Overstock.com. But some industry executives have warned about the risks of an unregulated currency.

Ebay bought Braintree for $800 million in 2013 to boost PayPal’s mobile presence. “We do believe that Bitcoin will play an important role in payments in the future, but we have nothing to announce,” eBay spokeswoman Jennifer Hakes said.

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Corporate Finance

By NKIRUKA NNOROM

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hare prices of companies quoted on the Nigerian Stock Exchange, NSE, will be significantly eroded in the remaining part of the year following the release of weak quarter two earnings.

This, according to a research report by Financial Derivatives Company, FDC, will lead to correction in the share price of firms already overpriced.

Speaking at the company’s monthly economic news and views at Lagos Business School Executive Breakfast Meeting, the Managing Director/CEO, FDC, Mr. Bismarck Rewane, said that the poor corporate earnings have started affecting investors sentiment, adding that market sentiment will remain negative in the second half of the year.

He stated that while market sentiment has been favourable to companies with positive half year result, the shares of companies with negative H1 financials are already being punished.

For instance, FBN Holdings Plc, which grew turnover by two percent in the half year ended June 30, 2014, and posted 12 percent decline in profit before tax has suffered 11 percent share price decline and seven percent decrease on return-oninvestment in the month of July alone.

In the same vein, Cadbury Nig. Plc, which turnover and

Global stocks up on Putin comments, bond yields fall

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CLOSING CEREMONY: - From left: Mr. Travih Nunayon, Sports Development Officer, Lagos State Government; Mrs. Adenike Ibirogba, Board member; Mr. Gbolade Osibodu; Chairman of Board, both of Special Olympics Nigeria; Mr. Clem Ugorji, Director, Public Affairs and Communication, Coca Cola Nigeria ltd and Mrs. Funmito Agusto at the closing ceremony of the just concluded 2014 Special Olympics Nigeria National Games in Lagos.

NSE: Stocks price erosion looms over weak earnings … FBN Holdings, Cadbury post negative RoI PBT nose-dived by 12 percent and 50 percent respectively, has witnessed a seven percent RoI decline, while the share price has surprisingly grown by 26 percent. Also, Total Nig. Plc that recorded mere two percent turnover growth in the same period and 12 percent decrease in PBT has

suffered four percent decline in its returns for the month of July and one percent growth in share price movement in the six month period.

On the positive side, Stanbic Holdings Plc, which recorded 13 percent growth in its half year turnover and 50 percent growth in profit

‘Efficient market making structure critical for successful ETF’

By NKIRUKA NNOROM

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n efficient market making structure is needed for successful operation of an Exchange Traded Fund, ETF, on the Nigerian Stock Exchange, NSE, said Mr. Michael Mgwaba, an Exchange Traded Fund expert at ABSA Capital, South Africa.

He made the remark while making a presentation at a one-day investment management seminar tagged “Portfolio Construction – Beta Strategies” for stockbrokers, portfolio managers, insurance companies, pension funds administrators, institutional investors and some selected staff of the Exchange, organised by the Nigerian Stock Exchange, NSE, as part of its mandate to broaden and deepen the knowledge of market participants.

He called for cooperation among all the ETF providers, C M Y K

including Vetiva Fund Managers Limited, Lotus Capital Limited and ABSA Capital, the NSE and other regulatory bodies in the capital market in addressing perceived challenges that could mar the successful listing of ETFs. Specifically, he stated that issues around the status of market makers, collective investment schemes, as well as listing requirements for ETFs must be addressed.

He stressed that retail and institutional investors need to be educated more, while active marketing strategy is needed to drive the programme.

Empahsising the usefulness of ETF as a tool for asset allocation, he said that it provides immediate liquidity to the market and helps satisfy the need of investors for liquid securities. Mgwaba said ETFs would in principle provide retail and institutional investors with an

easy, convenient and cost effective access to various assets, diversified portfolios of assets and whole markets.

According to him, it would help strengthen the regulatory control and operational framework by implementing the proven international regulatory standards. “It would provide investors with an access to previously unavailable asset classes, thus improving diversification opportunities and reducing investment risk,” he stated, adding “Once these products are well established and the investors become better educated about and more comfortable with investing in general and the investing in passive investment products such as ETFs in particular, then it becomes feasible to expand the product offering by creating ETFs tracking more liquid national / regional / international equity, fixed income, indices and offering those to the investors.”

before tax, PBT, has achieved huge 46 percent share price growth year-to-date and 20 percent return-on-investment in the month of July alone.

Also, Transnational Corporation of Nigeria (Transcorp Plc), which posted 177 percent and 122 percent surge in half year turnover and PBT respectively, has achieved year-to-date share price growth of 26 percent and nine percent returns in July; Lafarge WAPCO, on its own part, has achieved yearto-date share price growth of four percent and RoI improvement of eight percent over 12 percent and 29 percent increase in half year turnover and PBT respectively.

Nigerian Breweries Plc, which turnover and PBT grew by six percent and 14 percent respectively, has seen a seven percent share price growth and five percent returns in July.

Speaking further, he said that shares of downstream petroleum sector have soared, while those of listed upstream sector are also surging, noting that the surge was more of speculation than dependence on fundamentals.

Rewane further explained that corporate results in the H1 showed increasing decline in finance costs, indicating a shift in bargaining power in favour of corporates relative to the banks.

lobal equity markets edged higher on Thursday after President Vladimir Putin of Russia sounded a conciliatory note over the crisis in Ukraine, while bond yields in Europe fell to record lows as the euro zone’s recovery stalled in the second quarter.

Putin told Russian ministers and members of parliament in Crimea that Russia would stand up for itself but not at the cost of confrontation with the outside world, easing off months of tough rhetoric over Ukraine.

Stocks on Wall Street rose, following gains in Europe, where equity markets have tumbled in past weeks on fears of an escalation of tensions between the West and Moscow over Ukraine.

“The situation in Ukraine will only become a problem if it gets much worse, and right now it doesn’t seem like that’s going to be the case, which is helping the market hang in there,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

The pan-European FTSEurofirst 300 index rose 0.28 percent to close at 1,329.14, and MSCI’s allcountry world index rose 0.3 percent.

On Wall Street, the Dow Jones industrial average rose 55.26 points, or 0.33 percent, at 16,707.06. The Standard & Poor ’s 500 Index was up 7.98 points, or 0.41 percent, at 1,954.70.

Europe stocks climb as GDP data fuel stimulus speculation

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uropean stocks advanced, reversing earlier losses, as data showing the euro area’s recovery stalled in the second quarter fueled speculation of more central bank stimulus.

ThyssenKrupp AG climbed after posting quarterly earnings that beat projections.

Royal Boskalis Westminster NV surged 8.2 percent after saying it will start a share buyback programme. RWE AG declined 2.1 percent after saying first-half profit fell 62 percent. Novozymes A/S slid 6.5 percent after the supplier of enzymes reported secondquarter net income that trailed analyst estimates.

The Stoxx Europe 600 Index rose 0.3 percent to 331.04 at the close of trading, after earlier dropping as much as 0.4 percent. The benchmark gauge has fallen 1.5 percent this month amid crises in Ukraine, Iraq and the Gaza Strip.

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an you remember when the idea of privatizing NEPA, NITEL, NNPC, NPA was first eagerly promoted? Well, don’t worry. People like me are here to remind you. It was in the 1980s when the Technical Committee on Privatisation and Commercialisation, TCPC, headed by late Dr Zyyadd was established. For four years, after the proclamation, nothing happened to our biggest public enterprises – despite all the valid reasons advanced for getting governments to relinquish their strangleholds on businesses which are best left to the private sector.

Then in 1992, when Chief Ernest Shonekan was lured ro resign his appointment as the Chairman/Managing Director of the UAC of Nigeria, Plc, to assume the position of civilian Head of Government under military President Babangida, he quickly orgainsed the first National Economic Summit, NES, whose main recommendation was the need to urgently privatize the nation’s largest parastatals.

That meant that four years, after the initial enthusiasm for privatization, the enterprises were still in public hands.

Today, 2014, twenty six years after the idea of privatizing our giant parastatals, only NEPA had been successfully privatized. NITEL and NNPC had remained drain pipes for corrupt public

officials. With NITEL we missed a golden chance when the GSM arrived in Nigeria.

Typical Nigerian Factor ensured that NITEL was not sold when it could have made good money for Nigeria.

Now, most of the infrastructure has become obsolete and can only be regarded as scrap for which we must pay to get removed.

And few people even remember they own a land line anymore. That leaves us with both NITEL and NNPC – which also might be going the way of NITEL. An enterprise which could have been turned over to the private sector, years ago, and, at a good price, might have to be given away very soon – lock, stock and barrel.

The imminent failure of NNPC is inextricably intertwined with the failure to get an agreed PIB signed since the first one was presented in 2010 to the National Assembly. PIB 2, which is about to suffer the same fate as PIB 1, will probably be the last attempt aimed at privatizing NNPC and getting value for money.

Events rapidly shaping the future of oil, globally, point increasingly to a world which is becoming less dependent on Nigerian crude oil. With declining crude oil exports, Nigeria’s ability to pay for refined petroleum products will also be reduced and the value of our ageing refineries will head to the basement.

PIB and declining oil revenue Most knowledgeable people in government, and the National Assembly, as well as the government of oil producing states are aware of this. But, the enthusiasm to do the hard work required to get PIB passed had waned considerably.

Instead,

will be followed by selfinterest issues regarding official and unofficial remuneration for the new holders of legislative power.

Jonathan will also be concerned about leaving a legacy starting with the selection of a cabinet which

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“Every great enterprise starts off with enthusiasm for an exalted aim and ends up bugged down in petty politics.”

Charles Peguy, 1873-1914.

(VANGUARD BOOK OF QUOTATIONS p 49).

The imminent failure of NNPC is inextricably intertwined with the failure to get an agreed PIB signed since the first one was presented in 2010 to the National Assembly

politicians, especially those seeking elective office, next year, have collectively directed their attention towards the 2015 elections.

PIB 2 is effectively dead and it will become history on May 29, 2015. The question is: will it be followed by PIB 3? The answer is: May be.

Even if Jonathan secures a second term, he will have to present another or the same bill to a different National Assembly. It will be back to step one once again.

Furthermore, the most urgent matter on the NASS agenda will not be consideration of a very complex bill. Sorting out the leadership structure of the NASS and establishing power positions will come first. This

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will make it possible for him to achieve whatever he assigns to himself as his main objective. And there is no guarantee that the next NASS will be populated by people ready to support the President.

There will certainly be no PIB 3 if a Northerner succeeds Jonathan next year. That possibility constitutes the heart of the tragedy which will befall the oil producing states, which stand to benefit most if PIB 2 is miraculously passed this year. With each passing day, the window of opportunity closes more than before.

Already, the signs of trouble are evident in the creeks and in the deep water

blocs. Several oil rigs have shut down production on account of theft, piracy and kidnapping of indispensable foreign technical workers. As other countries, all over the world, open their oil blocs for production, or expand the areas of operations, experienced rig operators are picking up stake in search of safer work places. Most will not return, once they leave, and replacements might be difficult to recruit – as long as there is work elsewhere.

The relentless crude oil export decline, which has already savaged the budgets of Federal, States and Local Governments in 2014, will increase the economic hardship being experienced now and might reduce GDP growth next year. Even at the projected 5.8% for 2014, few new jobs have been generated relative to the volume of job seekers turned out by our schools annually. Slower growth will certainly exacerbate the intractable situation with respect to mass unemployment – particularly among the youths.

The most astonishing thing about PIB 2 is the total lack of interest in it by the oil producing states and their governments. If PIB 2 fails this year, the people of the Niger Delta will have the present Governors, Ministers, legislators at both the Federal and State levels to blame for the tragedy that will befall Nigeria in general and the oil producing states in particular.

Visit: www.delesobowale.com or Visit: www.facebook.com/ biolasobowale

Aviation

Chidoka displeased with state of MMIA underground tunnel

BY LAWANI MIKAIRU

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he Minister of Aviation, Mr. Osita Chidoka has expressed displeasure over the dilapidated state and environmental threat posed by the abandoned underground facilities at the Murtala Mohammed International Airport, MMIA, Lagos.

Speaking during the tour of the Lagos Airport facilities, the minister said the abandonment of the underground facilities, which formerly housed the disused Control Center of the Close Circuit Television(CCTV) that monitored movements around all sensitive and sterile areas of the airport complex, Nigeria Immigration Service C M Y K

(NIS), the Nigeria Customs Service, NCS, and car park for airport users was a disgrace to the nation.

This is the first time a Minister of Aviation will be inspecting the underground tunnel in the past 14 years.

He was shocked at the unkempt nature of the underground facilities and ordered the airport’s management to give the underground facilities a facelift.

The minister also insisted on inspecting the car park, which is also underground at the terminal, suspecting that it would be flooded, and the Acting Airport Manager, South-West, Engr. Noah Sanya told the minister it was flooded.

The minister said: “This

thing I am seeing is not good for the image of the country.

Look at the facility here, it is flooded. I believe we were not supposed to see this, but we have seen it.”

Chidoka also queried why the arriving passengers at the airport were denied the usage of the arrival drop zone, stressing that the action of the Authority further inconveniences passengers at the airport.

He noted that if departing passengers could be allowed unrestrained access to the terminal’s drop off zone with their vehicles, he wondered why the same gesture could not be extended to the arriving passengers.

The minister said, “You go and put some old buses at the parking area and tell people to board them to the airside. I want to say it here now that

you should remove the barrier here, which disallowed arriving passengers from being picked up by their relatives and allow

passengers to have access to this place. You can put speed bumps here, which will reduce high speed.”

Air France plane suffers faulty tyre pressure indicator

By LAWANI MIKAIRU & DANIEL ETEGHE

A

ir France plane on a flight from Paris to Lagos international Airport last week suffered a faulty tyre pressure indicator and the pilot was forced to call emergency. The plane with 178 passengers and crew members aboard was able to land successfully after the tyre pressure was later discovered to be in good

condition by the pilot.

A statement by the Nigeria Civil Aviation Authority , NCAA, General Manager, Public Affairs, Mr Fan Ndubuoke, said “ Air France with registration no F-GZCC Paris - Lagos declared emergency with 168 Passengers and 10 Crew total, 178 Pa s s e n g e r s .

Faulty Nose wheels, estimating Lagos 5pm, we have requested Passengers manifest from Air France.”

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Homes & Housing Finance Stories by YINKA KOLAWOLE

UK homeowners warned of mortgage rise

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he number of UK homes repossessed during the Spring fell, but households have been warned by lenders to prepare for rate rises.

A total of 5,400 properties were repossessed in the second quarter of the year, the Council of Mortgage Lenders (CML) said. This was down 1,000 on the previous three months, and down by 2,200 on the same period a year ago.

CML said that it would welcome Bank rate rises only in ‘baby steps’.

“Rates will rise at some stage, of course, and borrowers should be planning for that now. We welcome the message from the Bank of England that, when it raises rates, it plans to do so in a series of ‘baby steps’, matched to a careful assessment of the ability of households to deal with higher borrowing costs.

Any borrower anticipating payment problems should talk to their lender as soon as possible,” said Paul Smee, director general of the CML.

US mortgage rate declines

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verage long-term U.S. mortgage rates declined this week, approaching their lows for the year.

Mortgage firm, Freddie Mac, said the nationwide average for a 30-year loan slipped to 4.12 percent from 4.14 percent last week. The average for a 15-year mortgage fell to 3.24 percent from 3.27 percent last week.

Mortgage rates are below the levels of a year ago. They have fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term borrowing rates low.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.42 percent Wednesday, brushing its low for the year of 2.41 percent and down from 2.47 percent a week earlier. It fell to 2.38 percent in trading Thursday morning.

At 4.12 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Fed has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end in October.

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with agency report

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agos State government has initiated moves to regulate estate agency fees in the state which it claims ranks highest when compared with other countries.

To this end, a stakeholders’ meeting was recently convened at the instance of the Lagos State Real Estate Transaction D e p a r t m e n t (LASRETRAD) to deliberate on “Real Estate Agency Fees in Lagos”. In attendance were various associations of estate agents, legal practitioners and developers, among others, operating in the state.

Issues discussed at the meeting included acceptable rates to be collected as agency commissions, the models to be adopted, based on best practices obtainable in other countries.

The State’s AttorneyGeneral and Commissioner for Justice, Mr. Ade Ipaiye, in a paper titled: ‘Agency Fees and its Related Issues’, noted that agency fee is a contractual agreement which is subject to negotiation. Ipaiye who was represented by the Senior Special Adviser to the governor on Justice, Mr. Olanrewaju Akinsola, drew a comparison between Nigeria and other countries, noted that agency fees in Nigeria are the highest.

According to him, agency fee in Ghana is five percent; in Kenya it is 1.25 percent and in South Africa, it ranges from four to eight percent.

Housing estate made affordable through mortgage

Lagos moves to regulate estate agency charges He further noted that agency fees in these countries are either paid by property owners or shared by owners and buyers/tenants whereas in Nigeria, estate agency fees range from 10 percent to as high as 75 percent.

Also speaking at the event, Special Adviser to the Governor on Housing, Mr. Jimoh Ajao, said the state government is worried on the number of negative complaints received from the public on the activities of estate agents in the state.

“Government has realised that estate agents are charging varying percentages as agency fees, some as ridiculous as 75 percent of rent for low-end properties,” he noted.

According to him, the appropriate fees to be paid must be known; the true condition of the property

must be disclosed, according to article 3 (1-5) and 5 (i-3) of the primary duty to clients in the Code of Conduct of an estate agent.

Ajao said LASRETRAD was established for five basic objectives: maintaining real estate market confidence; ensuring the protection and enhancement of the stability of Lagos State real estate market; securing certain level of protection for property seekers; making property transaction process extremely transparent; and total eradication of quackery in real estate industry in Lagos State. “As we roll out the approved bill board advertisement for properties in the state, we hope to create a uniform advertisement platform with the aim of identifying quack agents for necessary prosecution,” he added.

In his remark, Chief Operating Officer, Property Communications, Boye Ajayi, said the regulation of the sector is necessary to stop the chaotic situation where estate agents charge indiscriminately.

“For someone to rent a room apartment, such a person must be economically handicapped. Why would an estate agent charge such a person huge amount as agency fee?

It is unimaginable for an agent to charge agency fees of same amount as the rent. The government is only trying to sanitise the industry. By doing this, these nefarious activities will come to an end.

There must be a regulated fee so that somebody who wants to buy or rent a house will know what he has to pay,” he stated.

Common mistakes in online property marketing T

he online property market is growing very rapidly. With millions of new property listings appearing online every day, it is an increasing struggle to make any particular property stand out amongst the crowd. By identifying common advertising mistakes and recognising what makes a strong, quick-to-sell listing, agents can ensure that their properties grab the attention of potential buyers and renters. Real estate portal, Lamudi has identified the following as the five most common mistakes made by real

estate agents in order to help improve listings and sell property faster.

No or only a few photographs : Marketing property online means that the listing has to be visually appealing. Many real estate agents do not include photographs of the property in the listing. Make sure to make at least five highresolution pictures in different rooms of the house or apartment. Dimly lit rooms will not grab the attention of home buyers, neither will the one and only picture of the house.

Bad language: Grammar plays an important role in

selling real estate, so make sure to double check spelling and sentence structure before listing the property. Property descriptions with no grammatical errors in the title statistically get more views.

Descriptions including persuasive language such as: “In a Hurry to Sell” or “Motivated to Sell” deter potential buyers, as this leads the buyer to question why the agent wants to sell so fast.

Vague neighbourhood descriptions : Listing all the high quality amenities that are nearby is important, however many real estate agents limit the description

of the surrounding area. A home buyer wants to know as many details as possible about future neighbourhood, such as if it welcomes pets or is cyclist-friendly.

By including these details, listings are likely to get more attention from house-hunters. The same applies to neighbourhoods that have a low crime rate or those that foster a sense of community and are vibrant and diverse. Make sure to include all of a neighbourhood’s assets in the description of a property.

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People in Business

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r. Onyeani Uka Nwosu is the Chairman/Chief Executive Officer of Abia State-based Green Town Farms, a farming business based on professional research. In this chat with Financial Vanguard, Nwosu says farmers can only break even when they mechanise the processes. He urges government at all levels to do more for the sector, noting that if only a small percentage of money spent on the oil and gas sector is spent in agriculture, Nigerian economy will burst. Excerpts: Background : After his first degree in Accounting and a Master’s in Business Administration in Banking and Finance, Mr. Onyeani Nwosu who is a Fellow of the Chartered Institute of Bankers (FCIB) worked in the banking sector for 30 years first in Union Bank, through Union Homes and then Intercontinental Bank Group and Intercontinental Homes where he rose to the position of Group Head, Banking and Mortgages. He took charge of the overall business development of the bank as a second in command, next to the managing director. He retired in February 2012.

— ONYEANI NWOSU

BY EBELE ORAKPO

overtime. When these farms are doing well, they will pay corporate tax to government.

Government should do something to ensure that investors in agribusiness get their money back and by so doing, they will be encouraging others to join.

*Part of Green Town Farm. Inset is Mr. Onyeani Nwosu This will tell you what the average Nigerian will do if given the required support and that is why we are calling on the Federal Government to do more.”

Government should do more: “In one of our farms, we called for quotes and we were given a bill of N15 million just to survey about 200 hectares of farmland. There

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Going into agriculture : “Prior to leaving the bank, I considered areas that I would want to spend the rest of my time and agriculture was one of them. It used to be the number one until oil came and stole the show and it dropped to number nothing. Gradually, it has started coming up, kudos to President Goodluck Ebele Jonathan with his agricultural transformation programmes being anchored by the Minister of Agriculture, Dr. Akinwumi Adesina, Special Adviser to the President on Millennium Development Goals and the support of the Federal Ministry of Finance through the Bank of the North. So the sector has received a little boost but a lot still needs to be done to enable us tap the enormous resources in the sector.

“Agriculture means different things to different people. To the lay man, it is a means of livelihood; to the corporate farmer, it is a business.

Agribusiness means a lot of things because the agricultural value chain is very long and can employ over 60 per cent of the Nigerian population if we really want to do justice to agriculture. People can key into crop production, animal husbandry; crop or animal processing. This will further enlarge the capacity in terms of employment and empowerment for the masses. For instance, if just a little percentage of funding given to oil and gas is given to agriculture, the economy will burst.

"Exploration, well development, etc., cost billions of dollars, so if only a small percentage of the money is spent in agriculture, you can imagine what the turn out will be. For instance, cassava can be used for biofuel, food and other industrial uses like starch required in the pharmaceutical, textile, bakery and paint industries.

Agric value chain is long, can employ over 60% of Nigerians

important as far as farm inputs are concerned, so we need a more proactive and more practical support from government at all levels.

“If we borrow from the banks to buy tractors, bulldozers and all that, then we will continue to pay debt until the next generation and it is not good enough so government should show interest in acquiring heavy duty equipment and all other

Our objective is to establish an integrated farming system where waste in one section of the farm would become raw material in another section

are so many ways government can come in here: One, bring the cost for stamping and registration of agric land down to zero if possible; zero or basic cost for perfection of farming properties. They should have a pool of heavy duty machines for on-leasing to farmers at a subsidised rate to encourage mechanisation which will in turn force down the price of basic food items.

It is evident that you cannot make it as a farmer if you don’t mass-produce, volume is it! And the only way to mass-produce is to mechanise your processes.

Government should stop making mockery of farmers.

They will go on air and advertise that 100 metric tons of fertiliser have been made available to farmers. By the time you cascade it to the locals, you see a farmer getting two bags of fertiliser even though it is subsidized.

How many plots of land will that cover? They should make this product available and affordable. Availability and affordability are very

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farm implements and attachments. On our own, however, we have started buying tractors and soon, they will arrive. If we don’t mechanise, we won’t be able to break even.

“We have more than 15 culverts and bridges in our farm area to construct; assuming we spend N3 million on each of these, it will automatically affect the sums of money meant for the real thing which is farming.

This is where government has to come in.”

Single digit interest rate : “I am yet to see the singledigit credit facilities. In fact, not just single digit but lower single digit between 0 and 5 per cent. A lot of cheap funds are available in Nigeria. Take for instance the Pension Fund, whereas we are clamouring that part of it should go into mortgage development, some of it should go to agriculture. Put the money in infrastructure development and then recoup some of the money

Recruiting young farmers: “We also realised that recruiting young people to work in farms located in rural

areas is a problem and that is why we have started putting up farm houses for young graduates who may want to work and live in the farm.

These are some of the strategies we have adopted to make sure that our farm comes to be what we want it to be, an integrated farming system where waste in one section of the farm would become raw material in another section.”

Investors should invest in farm devt: “A lot of investors in oil and gas, manufacturing etc., can key into the agriculture value chain. I will not advise anyone to start rolling out agric-based factories now because the inputs are not available, so first and foremost, they should invest in farm development, then when the produce is enough to provide a certain level of capacity in terms of availability of farm inputs, then they can set up agro processing units. People should learn to embark on long-term development instead of wait and take. Most Nigerians are looking for what they can do to get their money fast. Agriculture is not such a place except if you go into annuals like vegetables but you can imagine how many acres of land you need to cultivate to produce truckload of pepper even though they are fast.”

Visit to Israel, Songhai: “I went with a team of my staff for training in Songhai Farms and Israel. They are now practising what they learnt.

We have invested so much in capacity-building. I slept in the farm for two weeks in Israel to understudy the Kibbutz farming system and I told myself that someday, people will come to my own

farm and sleep. We were comfortable and we had fun.

They were small houses but the facilities were of world class, what you see in threestar hotels.”

Corporate social responsibility (CSR): “If we don’t make the locals living around the farms comfortable to an extent, they will turn to become a very big risk factor and that is why we are doing a lot on CSR in localities where our farms are. We gave them boreholes, talk them into going to school and promised them employment.

They provide labour for us because we are still doing manual but by the time we mechanize, they will be trained to align with the process. If you do not engage them, they will become restive, so agriculture is another way of curtailing youth restiveness and militancy.

Why Green Town?

“When we wanted to start farm business, we were looking at two things – nature and community. Green is synonymous with nature, it depicts power and life so we were looking at natural habitat for our kind of business. We considered all these and decided to call it Green Town in the sense that we have a community life in mind. We want to focus not just on our pocket but on the community. We are also looking at doing something that is integrative in nature, it is not all about plantain, or palm or cassava, we want to look at animal husbandry, processing etc. So we are looking at community life whereby man and nature will be in harmony.”

*Mr. Nwosu... We are looking at community life where man and nature will be in harmony.

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Advertising, Media & Marketing Stories by PRINCEWILL EKWUJURU

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uite recently, during the House Committee on Health hearing on Tobacco Bill, the Chairman of the committee, Senator Ndudi Elumelu, said their intention was not to ban production of legitimate tobacco locally. Of course, one can safely assume that halting the production of tobacco locally is not the intended outcome of the Tobacco Bill, but slamming unbalanced regulations on the industry will ultimately lead to outcome similar to prohibition.

Regulations are important for most consumables because of the inherent risks in over consumption, tobacco products are no exception. The need for regulation does not imply that the supposed risk associated with tobacco product should be combated with skewed regulation. At the core of the regulation is government, consumer, general public and the industry. Regulations that do not take cognisance of these competing stakeholders would not stand the test of time.

In many developing countries, particularly in most African countries, a small fraction of their population smoke. The overall smoking rates among men and women in Africa are low compared to other developed nations.

According to 2009 country by country smoking data by Tobacco Atlas, smoking among males in Australia is 22.3 per cent , Denmark 30 per cent, Greece 63 per cent, US 32 per cent Canada 23.8 per cent while it is 10.6 per cent in Ghana, 15.2 in Benin, 8.9 percent in Niger, 15.6 in Senegal. The Global Adult Tobacco Survey, GATS 2013, conducted by National Bureau of Statistics, NBS, estimated that 5.6 per cent of Nigerians consume tobacco products.

What can blur any regulation is for it to be modeled along certain framework developed by bureaucrats in Geneva not minding contextual differences in each country. Unfortunately, the current tobacco bill at the National Assembly is modeled to World Health Organisation, WHO projection and its Framework Convention on Tobacco Control, FCTC, a treaty designed in 2003. The key driver of anti-tobacco advocacy and the current bill is largely driven by the WHO’s projection that 70 per cent of estimated 8.4 million tobacco death will occur in developing countries by 2020. This in turn had resulted into hordes of legislative interventions.

According to Mr. Thompson Ayodele, who is with the Initiative for Public Policy Analysis, an independent think-tank based in Lagos had said at a public lecture that: “since WHO’s inception,

Lagos NIPR AGM focuses on Nigeria’s political leadership

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*AGM-From Left: Mr. Charles Chijide, President of Outdoor Advertising Association of Nigeria, OAAN, Mr. Theo Ekechi, Commissioner for Information and Strategy, Imo State, and Mr. Emmanuel Ajufo, Secretary-General, OAAN during opening ceremony of the 29th Annual General Meeting of OAAN in Owerri, the Imo State capital recently.

Tobacco bill war: Unending facts and realities guidelines, projections and targets are not in short supply.

WHO has been in the vanguard of formulating health guidelines and designing treaties, apparently to shore up healthcare of earth’s inhabitants.

However, it is on record that WHO projections are mostly inaccurate and its targets are largely unmet. A perfect example is WHO’s ambitious goal in 2001 to treat 3 million HIV/AIDS patients in developing countries in 2005.

Unfortunately, less than half of that target were met. What is inherently wrong with these projections and targets are their one-cap-fits all approach without regard to local

peculiarities in each of the countries. Policymakers should not be tempted, because it comes from WHO and other agencies, to domesticate hook, line and sinker, treaties and policy guidelines from world bodies whose officials are far removed from realities in each of the countries.”

Mr Ayodele further stated that the key consideration for the National Assembly is whether banning of tobacco products in Nigeria will not have serious backlash given our porous border. The blowback is better imagined than felt. The central questions for stakeholders are (a) would stoppage of production of tobacco product locally make

smokers quit? (b) Who would fill in the vacuum created by the stoppage of legitimate local producers given our porous borders? (c) Would those who might fill in the vacuum be in the national and public interest?

The public discussion about the effect of tobacco in Nigeria in recent time tends to suggest that the best way to end health risk associated with tobacco product is when the industry stops production. What should be realized is if the regulatory environment force local firms to stop production, smokers will still get the products through a variety of sources.

This will come at a higher cost, such as loss of revenue to the government and other higher societal costs.

IDL invests over N200m to grow economy I

NTERCONTINENTAL Distilleries Limited, IDL, said the over N200 million and three jeeps given to its trade partners is the company’s way of contributing to economic growth.

The company said the amount given as reward to the distributors in the 2013/14 trade partners award ceremony is the only way to help expand the distributors businesses, and eventually help employ more hands, thus reducing unemployment in the process.

Giving the breakdown of the reward, the Managing Director of IDL, Engr. Patrick Anegbe, said that the company spent N72.2 million on cash prizes, N36 million for gift items and the three Sports Utility Vehicles, SUV jeeps to top distributors, bringing the total amount spent to over N200 million.

On the SUV’s the managing Director said: “these are part of the gift items, some of the distributors have done exceptionally well, so very well that we need to encourage them, In fact, we cannot encourage them enough. We believe whatever we are doing to encourage them is a good investment and will give come in terms of turnover.

On setting target for the distributors, Anegbe said that at the beginning of every year the company set target at various levels of the distributors, you are made to know what to win at the end of the year. “This pushes the distributors to want to do more at the end of the year. It is an incentive scheme that enables one to want to do more,” he explained.

Speaking on the changing of some of its bottlesChelsea, Veleta and Squandron, the Managing Director, said the company is known for creativity and innovation, “and this is our strength. From time to time we have to do that, and apart from doing that to make our product look more premium and more appealing on the shelf, it is also a way of checkmating adulteration. if we don’t do that, before you know it, they are almost swallowing you up (Adulterators). We make sure from time to time we are always a step ahead with what adulterators can do.” Anegbe who declined to reveal the amount spent in changing the bottles of three brands agreed that it is expensive changing the bottles, “but I don’t think it is very important now telling you exactly the cost of doing that.” while saying that the drinks are available in all our depots for onward distribution, he noted.

he Lagos State branch of the Nigeria Institute, said its 2014 Annual General Meeting will be anchored on Nigeria’s preparation for the 2015 general elections.

The AGM which starts with inter religious prayer for the country and the institute will be kicked off with a novelty match on August 30 and September 4, 2014 for the AGM proper with a public lecture that will x-ray how professional public relations strategies and methodology can be deployed to enhance participation and cooperation for effective management for political leadership Nigerians yearn for.

Chivita repositions

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hiLimited,manufacturers of Chivita premium has repositioned the fruit juice, renaming it Chivita 100%, while exposing other messages on the pack.

The company said the repackaging reflects the visual architecture of the brand, and that it has also boldly written along the length of the pack ‘100% Fruit Juice’ while ‘No Added Sugar’ is placed at the heart of the design and written in clear language to give the information greater prominence than before.

The company says the change is to communicate a clear and effective brand message that will instantly resonate with consumers.

Chi Limited went further to say that the rechristening and repackaging depicts a clear brand message of capturing the right language that embodies a brand so that it distinguishes itself from others.

For effectiveness, the company noted that for a name to resonate with consumers it must be simple, short and above all memorable, and must also parade instantly attractive packaging.

Speaking, Managing Director of Ozo and sons investments, Ejoor Ediri, said brands change their names for challenges of communicating a clear and effective brand message that will instantly resonate with consumers. “This is because very few brands are able to effectively match the message with each and every component of their brand or product,” said Ediri.

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ur parlous economic state has been attributed by some observers to our heavy dependence on increasing oil revenue and our inability to stimulate the performance of our industrial and agricultural subsectors, particularly the small and medium enterprises and thereby, also diversify the productive sectors of our economy.

This column has however consistently explained that the unyielding presence of surplus Naira deliberately instigated by our Central Bank is, ironically, actually the major obstacle to inclusive economic growth and diversification. In other words, economic Eldorado will eternally remain a mirage, unless we can successfully combat the decades old burden of a systemic Naira flood and buoyant dollar reserves inspite of widespread poverty nationwide.

Nonetheless, CBN’s unilateral substitution of Naira allocations for dollar derived revenue has been clearly identified in this column as the real cause of the disenabling excess liquidity; regrettably, however, the oligarchs who derive immense wealth from government’s impulsive borrowings of trillions of Naira with Treasury bills, fuel subsidy payments of over $12bn annually, and the ready access to humongous slush funds which facilitate corruption, understandably, do not want CBN to stop inducing the unyielding socially oppressive spectre of excess liquidity.

However, some readers of this column wonder how distributable dollar denominated revenue can be infused into the system without inducing the destabilising poison of excess Naira in the economy. Hereafter, the following explanation will juxtapose the related consequences of CBN’s substitution of Naira allocations for dollar revenue under the Current Payments Model

The realistic path to economic prosperity (CPM) against the Advocated Payments Model (APM) of adopting dollar certificates for the distribution, for example, of $1bn export revenue, to the three tiers of government in eight sequential scenes!

Thus, Scene-1, CPM: CBN unilaterally determines naira exchange rate and unconstitutionally captures the distributable $1bn revenue and prints/creates ( read as monetizes) N160bn as statutory allocations, which are domiciled in commercial bank accounts of beneficiaries!

Scene-1, APM: The $1bn is not substituted with N160bn; instead, beneficiaries receive dollar certificates for their respective portions of allocation, while the $1bn remains domiciled with the CBN, while naira exchange rate is ultimately determined by open market demand and supply.

Scene-2, CPM: The banks enjoy almost ten-fold leverage on the fresh naira inflow, with an enhanced credit capacity, which suffocates the money market with excess spending power , and fuels inflation!

Scene-2, APM: With strictly dollar allocations, no fresh Naira is created; the naira supply in the system remains unchanged, and cannot therefore instigate the usual disenabling systemic spectre of surplus naira.

Scene-3, CPM: In response to the threat of rising inflation, the CBN ‘altruistically’ steps in with treasury bills to borrow money it does not need at over 10 percent from the banks, so as to reduce money supply and curb inflation. Despite the oppressive cost, the borrowed funds are simply kept idle!

Scene-3, APM: In the absence of the usual naira surplus, CBN does not have to borrow money it does not need at over 10%; consequently, our increasingly oppressive debt

burden would cease! Banks would have no choice but to chase the real sector for business!

Scene-4, CPM: In order to further prevent liberal access to cheap excess funds in the market, CBN raises its Monetary Policy Control Rate (MPR) and this propels banks to increase their own lending rates; the resulting crushing cost of funds would therefore restrain customers’ motivation to borrow; interest rates, may rise above 20 percent, and

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The absence of systemic excess naira will promote single digit and lower inflation rates with positive knockon impact for increasing consumer demand, industrial consolidation, increasing job opportunities and economic diversification.

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reduce the prospects of industrial growth and the creation of increasing job opportunities with irrepressible inflation and contracting consumer demand prevailing nationwide.

Scene-4, APM: In the absence of the usual excess naira supply, the threat of inflation and government’s costly impulsive borrowing with Treasury bills will be minimised; CBN would therefore readily reduce its Monetary Policy (control) Rate (MPR) drastically; commercial banks will similarly drop their

interest rates across the board to single digit, so that businesses can access cheaper funds to finance new businesses as well as grow existing industries with increasing employment opportunities.

Scene-5, CPM: Ministries and State Governments, who require imports, are constrained to buy back dollars from banks who have become the prime beneficiaries of CBN dollar auctions. Ultimately, naira exchange rate comes under pressure as increasingly surplus naira in the market chase the rationed dollars auctioned weekly by CBN! The market dynamics of demand and supply consequently become unfavourably skewed against the naira, particularly more so, whenever CBN’s total monthly forex auction falls below the $1bn earlier unconstitutionally captured in Scene-1 above!

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cene-5, APM: The three tiers of government remain the owners of dollar values domiciled with CBN; however, these government agencies can exchange for naira, all or portions of their dollar certificates from time to time, directly through commercial banks. Thus, the usual naira surge when CBN prints/creates fresh naira balances for allocations of dollar revenue will cease; inevitably, the naira will become stronger against the dollar in the forex market!

Scene-6, CPM: The less dollars sold by CBN, the larger are CBN’s reserves, but the weaker also will be the naira, as less dollars will invariably become pitched against excess naira supply in the market.

The gap between official and black market naira rates consequently widens.

Scene-6, APM: The usual CBN bi-weekly dollar auctions

will also cease as constitutional beneficiaries directly trade their dollar certificates for existing naira balances with banks; (since dollar certificates are not legal tender in Nigeria). The dollar values will, however, remain domiciled with the CBN, irrespective of ultimate buyer!

Scene-7, CPM: In order to reduce the gap between the black market and the official rates of exchange, CBN commits the unforced error of freely allocating dollars to Bureau de Change, who in turn fund the requirements of treasury looters and smugglers of contrabands, not minding the adverse impacts of such misguided dollar supply on the economy. Indeed, such monetary policy management must be far from international best practice!

Scene-7, APM: In the absence of the usual liberal spectre of surplus naira, banks become wary of over committing their naira balances to just foreign exchange purchases. The black market for the dollar will rapidly contract, while the motivation for smuggling and money laundering will similarly be curtailed.

Scene-8, CPM: Despite a gasping manufacturing sector and deepening poverty nationwide, the banks and other speculative foreign investors celebrate another bumper year!!

Scene-8, APM: The absence of systemic excess naira will promote single digit and lower inflation rates with positive knock-on impact for increasing consumer demand, industrial consolidation, increasing job opportunities and economic diversification. A stronger naira will drive down fuel prices and ultimately eliminate subsidies!

SAVE THE NAIRA, SAVE NIGERIANS!!

Business & Economy Nigerian products: NBCC worries over unexplored UK market

BY NAOMI UZOR

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HE Nigerian British Chamber of Commerce, NBCC, has lamented over the huge demand for Nigerian products in the United Kingdom which should be earning Nigeria a tidy amount of foreign exchange annually but has remained largely unexploited.

Speaking at the business meeting tagged” A New Dawn For Nigerian Export” organized by NBCC, the President of NBCC, Prince Yemi Adefulu, said, Britain houses nearly 3 million Nigerians which makes it a

Nigerian nation outside of Nigeria, adding that, the Nigerian Population dwelling therein, is bigger than a population of over a dozen African countries.

“That population alone, with its huge buying power and access, is a huge national resource with which, regrettably, we have done very little. When this is combined with the large African diaspora in the UK, it should be a huge export market for Nigeria which should be providing jobs on our farms and factories daily. It is a strong evidence of a poor national strategy and planning that after well over 100 years of association with

the Uk at all levels, our pineapples, pawpaw, yams, bananas, plantains are hardly found in the UK’s departmental stores and corner shops thereby depriving ourselves of huge earnings and job opportunities” he stated.

According to him, his study has shown that there are several reasons responsible for the huge failure to tap into this huge opportunity, which is the get rich quick mentality which the oil boom syndrome has bestowed on Nigerians as nobody wants to work hard anymore or look long term, noting that, relationships in international trade takes time, consistent application and

Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Franklin Alli Ebele Orakpo Ifeyinwa Obi Rosemary Onuoha

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Group Business Editor Deputy Business Editor Energy Editor Asst. Business Editor Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Energy Reporter Industry/Agric. Reporter Energy Reporter Maritime Reporter Insurance Reporter

CONTRIBUTORS Princewill Ekwujuru Nkiruka Nnorom Jonah Nwokpoku Naomi Uzor Providence Obuh LAYOUT

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