SEPTEMBER 1, 2014
Over 57% of W-Africans lack access to electricity — AfDB T
HE African Development Bank (AfDB) has said that more than 57 per cent of the people in West Africa are without access to electricity. The bank stated this in its “West Africa Monitor Quarterly”, for the second quarter of 2014 report. It said that the percentage approximated the average for sub-Saharan Africa,” but extremely low compared with 23 per cent in the developing world and 18 per cent globally.” According to the report, with inadequate generation capacity, low electrification, and sporadic, unreliable and expensive service, energy is at the top of questions requiring adequate policy intervention. It explained that access rates varied from country to country, with eight per cent in Niger and 15 per cent in Burkina Faso, Liberia, Guinea, Sierra Leone and Guinea Bissau. The report added that about 70 per cent of the population in Ghana had access to electricity while 87 per cent were hooked to supply in Cape Verde. It also said that there were disparities in access to electricity between rural areas and urban centres in the sub-region, with urban dwellers having more access than rural people. According to the bank, the trend is more glaring in Ghana where 87 per cent of urban dwellers have access to electricity, compared with the five per cent in rural areas. It disclosed that West African coun-
tries had joined the Sustainable Energy for All Initiative towards achieving universal energy access by 2030, with renewable energy shared improvement and efficiency. It pointed out that the sub-region had great potential to expand its use of renewable energy sources, which included modern biomass, hydropower, solar, and wind and had remained untapped. “Using such sources would help to expand access while reducing reliance on traditional biomass, increase reliability and affordability, and contribute to climate change mitigation. Hydro power in West Africa has an estimated potential of 25,000 megawatts, yet only 16 per cent has been exploited and despite its wealth in waterways, it only holds 214 dams out of 1,282 dams in Africa. In addition, several in-country lakes and dams hold promise for renewable energy development,” it said. The report said that the Volta River held great potential for Burkina Faso, Ghana, and Togo while Lake Chad could be used to serve Niger, Nigeria, Cameroun and Chad. It acknowledged that solar power projects were spreading across the subregion, including the 155 MW Nzema solar power plants in Ghana, one of the largest in Africa. The bank revealed that Burkina Faso, Ghana and Guinea had potential for
Continues on page 19
NSPECTION - From left: Director-General, ICRC, Aminu Dikko; Chairman, Governing Board, ICRC, Senator Ken Nnamani and Member of ICRC Governing Board, Janet Adeyemi, on an inspection tour of facilities at the Uyo Township Stadium, Uyo, Akwa Ibom State, as part of a familiarisation tour of infrastructure projects in the state.
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18 — Vanguard, MONDAY, SEPTEMBER 1, 2014
Cover Story
Akwa Ibom govt seeks ICRC backing for seaport project The Ibaka Deep Seaport would change the matrix of the unemployed in the country; it will attract investors to the state,” he said. He restated that his administration was committed to building a sustainable economy through infrastructure development in the state. Akpabio thanked the chairman of ICRC and his team for the presentation made on the development of the Ibaka Deep Seaport. He said that their visit had rekindled the hope that the seaport project would be realised through PPP. He also called on the commission to partner the state government on the construction of dualcarriage way on Uyo-Aba Road, saying that the road would have a toll gate as approved by the Federal Government. Earlier, Sen. Nnamani said that the team was in the state to “share current issues in the
commission with the state government.” Nnamani, who is a former President of the Senate, commended Akpabio for promoting the concept of uncommon transformation of the state through infrastructural development. He noted that the state had had infrastructural development and that the next phase was industrialisation. He also said that the governor had laid foundation for investment in the state and assured that the commission would encourage him to do more. In his presentation, Mr Chidi Izuwah, the Executive Director, Public Private Partnership, ICRC, said that the visit was to discuss how to sustain the infrastructure development in the state. Izuwah said that the projects executed by Akpabio’s administration needed a framework to be developed for them for sustainability. *SEMINAR From left: Group Head, North Central, First Bank, Baba A. Wakili; MD, AB Ramis BDC Ltd, Alhaji Muktar Nayaya; and Group Executive, Retail Banking North, First Bank, Abdullahi M. Ibrahim at the First Bank, SME C o n n e c t seminar in Jos, Plateau State.
Fashion designers seek N150m to build production hub, retail store
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HE Fashion Designers’ Association of Nigeria (FADAN), Lagos Chapter, on Thursday said that they needed about N150 million to build a production hub in Lagos. Mr Kolawole Kuddus, the State Coordinator of the association, made this known in Lagos. He said that the production hub would also include a retail store that would display finished clothing items and accessories made by Nigerian fashion designers and pattern makers. “The association has proposed a production hub and a retail store where items from the hub would be displayed; it is going to be like a meeting point for key players. The hub is a child of necessity because it would serve as a breeding ground for budding fashion designers, reduce the high production costs in fashioning and also boost productivity. Here is an industry that employs about 70 per cent of the graduates in the last three years in fashion photography, magazine production, pattern making, styling and wardrobe consultancy. “The investment in the hub is nothing less C M Y K
than N150 million, and we are looking up to the government at all levels and investors to lend their support to this viable cause. With the scourge of unemployment, our industry has become a solace to so many unemployed people, and so any investment in this sector can never be in vain,” he said. Kuddus also said that FADAN had begun a monthly programme tagged “Designers’ Mart’ where young fashion designers gather to display their latest products. He said that the programme kicked off in June 2014 and has since attracted so many fashion lovers and yielded a lot of profit for the fashion designers. He urged upcoming fashion designers to register with the association in order to pull resources together, maintain standards and also build stronger companies with partnership. Kuddus also urged Federal Government to revive the textile companies as it would reduce the cost of raw materials for the fashion and design sector, and also boost value addition to Nigerian clothing products.
Vocation and technical education – a key to improving Nigeria’s development. (4)
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he focus is on the roles of technology and vocational education in enhancing entrepreneurial skills that will equip students for entrepreneurship education in Information and Communication Technology (ICT.) driven technological environment. The world has become globalized and the future prosperity depends on comparative advantage. This comparative advantage hinges on people and their technical or technological sophistication. Towards this, some crucial entrepreneurial and technical skills needed by the students in colleges of education (technical), polytechnics and universities to meet the trends in a global economy is analyzed. Technology education is to be considered as the key agent of technology development, either as a way of developing human capacity, increasing the shield work force for modernization, industrialization, environmental development or as a matter of personnel freedom, developing capability and empowerment. Technology education is increasingly recognized to be central to both the origins of technological development and challenges and to the prospects for successfully dealing with them (Alam, 2009). Decision makers at all levels, need timely, reliable access to knowledge generated by technology and technical education to introduce rational policies that reflect a better global understanding of complex technical, economic, social, cultural and article issues concerning the society, and our environment. Technical decision making and priority setting is an integral part of overall development planning and formation of technology development strategies. Above all, technology education is a human right and, as such, should receive priority in the allocation of national resources. It has become very necessary not to only keep technology education bound to the role of manufacturing skilled manpower but also to economic development and global economy. In Nigeria, technology education was previously not seen as fundamental for national development, or for the
economic development, but for the school dropouts, and other social and political development within the nation and for individuals. Hallak (1990) argues that technology education is also linked to human resources development and that this has an impact on more than just economic growth, but also an impact on the wider development of individuals and societies. According to him, it contributes to: (a). Individual creativity, improved participation in the economic, social and cultural roles in society. (b). Improved understanding of an individual and heir respect for others, thus promoting social cohesion and material understanding (c) Improvement in health
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AKWA Ibom government has disclosed plan to build a deep water seaport through Public Private Partnership PPP. The government said it has acquired 14, 900 hectares of land for the take-off of Ibaka Deep Seaport in Mbo Local Government Area of the state. The state governor, Chief Godswill Akpabio, made this known in Uyo when the chairman of Infrastructure Concession Regulatory Commission (ICRC), Sen. Ken Nnamani, visited him. Akpabio said that the development of the seaport would be done through Public-Private-Partnership (PPP), and therefore solicited the involvement of ICRC in the project. “We have worked really hard to fast-track the emergence of Ibaka Deep Seaport, which has a free trade zone. We have also received a license from the Federal Government for the commencement of the project.
In Nigeria, technology education was previously not seen as fundamental for national development
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and nutrition. (d) Improved chances of economic development. (e) Improved technological development. (f) Socio-cultural change. (g) Democracy and equality (h) Ecological development/ quality of life (increasing people’s awareness of their environments).
From our analysis so far, it is clear that modernization and economic development depend on investment and appreciation of modern trends in technology education. According to Woodhall (1997) investment in technological education and training produces benefits for the individual and for society as whole.
Vanguard, MONDAY, SEPTEMBER 1, 2014 — 19
W
hen in 2004 President Olusegun Obasanjo muted the idea of a statebacked Nigerian company that can compete favourably with multinational companies, Nigerians partially bought into the idea. This led to the setting up of Transnational Company of Nigeria otherwise called Transcorp. It was meant to be private sector-driven but has the stamp and backing of the state. As soon as the company started, insinuations and condemnation trailed its take off and not too long after, what was a noble idea fizzled out. The dream was stillborn. Japan, unlike Nigeria, when it started its post-war economic reconstruction, put in place appropriate economic policies to support the development of the private sector. Over the years, it was the dynamism of the Japanese private sector that saw a country without natural everywhere in Nigeria and other Exchange. It has also been endowment emerging in the African countries. selected as the sole broker for A global bank ranking by The the Federal Government of late 70s as world economic Banker in 2014 has shown that Nigeria and was picked by the power house. Looking at the example of the South Africa dominates banking government to be the economy of South Korea, it is industry by assets in Africa. The settlement bank for the the same dynamism of private assets of Standard Bank alone sector companies that has is more than that of the five brought the country to its leading banks in Nigeria despite The people who are present status as one of the the 2004 banking consolidation. in position to do Asian tigers. You can easily Financial industry report also something about count the companies making showed that ETI is the largest this are busy wave in South Korea — Kia bank in Africa by spread and Motors, Daewoo, LG majority of its staff are discussing how to Nigerians. Indications are that Electronics, Hyundai etc. embezzle more Nigeria today prides itself as South Africa’s fourth largest money to afford bank, Nedbank will by the end the leading economy in Africa by gross domestic product of 2014 own 20 per cent of ETI. these exorbitant measure. That is all there is to Simply put, a South African bank prices instead of it. The question to ask is who will be the largest bank in Africa protecting the are those making it happen in by assets and one of its other the Africa continent? How many bank is about to own 20 per cent populace Nigeria-owned companies of of Africa’s largest bank by note are global players in spread. Funny enough, ETI is Africa's economic scenario? The not even headquartered in electronic warehouse receipt fact on ground has reduced the Nigeria but is depending on system introduced by the Commodity Nigeria euphoria to mere cheap Nigeria to drive its earnings. So Nigerian talk, fantasy and day-dreaming. who is the leader? Nigerians Exchange. Its founder and Apart from Dangote Cement, should please think and answer board chairman of the Nigerian arm of Standard perhaps UBA, Zenith, GTbank the simple question. Another South African bank, Bank, Mr. Atedo Peterside is and few others which have presence in some African Standard Bank, bought over on Nigeria’s Economic countries, though not in South IBTC/Chartered Bank which, for Management Team. The poser Africa and North Africa; there purpose of identity, is called to this government is: which is no visible presence of Stanbic/IBTC. This Nigerian arm Nigerian bank has made any Nigerian businesses elsewhere. of the South Africa bank is the inroads worth mentioning into But South Africa which largest equity trader by value in South Africa? How many Nigeria with fanfare celebrated Nigeria, largest portfolio Nigerian corporate entities are it took over from as the leading manager and is represented on operating in South Africa economy in Africa, is the council of the Nigerian Stock profitably? No thanks to
LIVING IN SELF-DELUSION:
Who controls Africa's economy— Nigeria or South Africa?
,
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haphazard economic policies of government. According to Jude Fejokwu, Principal Analyst, Thaddeus Africa Research, Templeton has its African investments office in South Africa but its emerging market star manager is more excited about Nigeria than South Africa. Renaissance Asset Management, he disclosed, has a pure Nigerian fund and so does Sustainable Capital. Both companies run the funds out of South Africa. It is now obvious MTN Nigeria generated 37 per cent of total revenue for the MTN Group worldwide as at first half of 2014. The Nigerian arm’s revenue was 41.5 per cent higher than that of the home country, South Africa. The Nigerian arm increased revenue by 21.5 per cent while the South African arm had a decline in revenue of 7 per cent. MTN has been in Nigeria for 13 years and Nigeria contributes more than a third of the revenue for the whole MTN Group worldwide. Meanwhile, MTN Nigeria is not listed here, where it rides the wave of profitability and repatriates the funds back home. DSTV will be no different from MTN in terms of where majority of its revenue comes from. It increases its subscription fees
every 15 months on average. It is also not listed in Nigeria. China’s National Development & Reform Commission handles issues of pricing in China in conjunction with two others. The organisation recently forced automakers like Mercedes to reduce their prices which the Chinese said were selling in excess of their home markets. The same thing that the Chinese authorities kicked against is happening here in Nigeria, Africa’s most populous nation and no one is talking of doing anything about it. The people who are in position to do something about this are busy discussing how to embezzle more money to afford these exorbitant prices instead of protecting the populace. Tiger Brands, a South African company has bought a majority stake in UAC Foods and Dangote Flour in its quest to drive earnings which have stagnated in its home country. Shoprite, another South African firm is working on its 10 th shop in Nigeria presently. It does not disclose its profit margins and is listed in its home country and not in Nigeria where it is making a lot more money than it envisaged and continues to have increases in headline earnings. I cannot but agree with Jude Fajokwu, Principal analyst Thaddeus Africa Research that Nigeria may be the largest economy overnight but it is definitely not seen as the wife of African financial services industry. It remains a bachelorette that no one is interested in marrying because they are getting so much milk and honey pie without commitment, so why proceed further.
Cover Story Nigeria no longer exports raw materials, says Orya
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HE Managing Director, Nigeria Export Import Bank (NEXIM), Mr Robert Orya has said that Nigeria had shifted from exporting raw materials to exporting finished products. Orya made this known in Abuja at a conference of the Coalition of Civil Society Groups which had Wealth Creation through Non-Oil Entrepreneurship, as theme. He said that the development was made possible by Federal Government’s resolve to shift attention from the oil sector to other sectors with huge economic potentials. “Now we are exporting more of processed and manufactured products and I think that is a very good start,” he said.
“This step is paying off as most Nigerians are seizing the opportunity to tap into the abundant natural resources the country possesses. The kind of effort government is making in diversification in terms of the management of our own resources is commendable. A lot of money is now being put into capital projects rather than recurrent expenditure,” he said. Orya stressed that there was need for more Nigerians to direct attention to the opportunities made possible by the diversification of the economy, adding that it is the responsibility of all citizens to develop the economy. “Nigeria belongs to all of us and nobody will come and restructure it for us; it is a collective responsibility
of citizens to implement government policies and that is patriotism,” he stated. In his speech, the Auditor-General of the Federation, Mr Samuel Ukura, lauded the role of civil society at promoting good governance and contributing to the growth of the democratic process in the country. “We are in the same business of promoting good governance, be assured of our support and partnership for the benefit of everybody,” Ukura said. On his part, the President, Coalition of Civil Societies, Mr Bassey Etuk, said that the conference was convened to outline the role of civil society in promoting investment and financial growth in Nigeria. He said that the organisations came together to explore alternative means of developing the country ’s economic sector outside oil.
Ov er 5 7% of W k Over 57% W-- Africans lac lack electricity Continues from page 17 hydro-power while Mali and Niger had for solar energy, and Cape Verde, Gambia and Senegal for wind resources. Earlier in June, Minister of Power, Professor Chinedu Nebo, had disclosed that less than fifty per cent of Nigerians currently have access to electricity, a whole seven per cent lower than the west African average reported by AfDB. Prof. Nebo disclosed this at the 15th Herbert Macaulay lecture organised by the Engineering Faculty of the University of Nigeria, Nsukka, adding that the Federal Government was, however, working hard to raise access to 75 per cent by 2020. He said government was also looking at the possibility of exploiting the country’s untapped coal resource, currently estimated to be in excess of three billion tons in reserve, to power electricity in the country. He explained that coal production declined in Nigeria due mainly to the discovery of oil and the perception that coal was a dirty energy, adding that a large quality of coal deposits was wasting away in such states as Enugu, Benue, Kogi and Gombe. The minister noted that with the current shortages of gas, the federal government was pursuing coal development as new frontier in the country.
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20 — Vanguard, MONDAY, SEPTEMBER 1, 2014
Business & Economy By GABRIEL EWEPU
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HE federal government has assured investors of gypsum resource development in the mining sector of dutyfree import on equipment. This was disclosed by the Minister of Mines and Steel Development, Mr. Musa Sada, during the visit of the management of Ojim Royal Investment and Property Limited and a foreign technical partner from Israel led by the Chairman, Chukus Chilaka to his office. Sada stated that it was part of government’s effort to provide a conducive environment for the exploration and exploitation of the nation’s mineral resources for socioeconomic development in the country. Sada said: “The Federal Government had reaffirmed its readiness to grant a duty- free importation of equipment for the development of the Gypsum resource. I can assure you that if you are setting up a processing plant for Gypsum resource, I can get you a dutyfree import of all equipment you can bring into this country.” The Minister also revealed that
Investors in gypsum assured of duty-free equipment importation currently the country has a reserve of 12.5 million metric tones of gypsum resources spread across different locations in the country, adding that, most mining operations in the
country were being carried out by artisanal and small scale miners who had formed themselves into cooperative groups. He explained further that the
cooperative groups were being coordinated by the department of artisanal and small scale mining in the ministry’ and assured the delegation of the ministry ’s support and
PROMO: From left, Mr Tam Tamunokenbia, Head, Consumer Protection Council, Lagos Office; Mr Johnson Agbo, Winner of Hewlett Packard HP promo star prize 'Trip to Seychelles for two'; Mr Tolulope Lawani, Marketing Manager, Printing and Personal Systems WA, Hewlett Packard and Mr Kingsley Ogude, Assistant Manager, National Lottery Regulatory Commission during the presentation of gifts to winners of HP promo held in Lagos.
partnership. Earlier in his remarks, Chairman, Ojim Royal Investment and Property Limited, and leader of delegation, Chuks Chilaka, said the purpose of the visit was to explore areas of collaboration with the ministry for the development of gypsum resource. Chilaka said his organisation with foreign technical partners were partnering with the Federal Ministry of Lands, Housing and Urban Development to build 20 million housing units for Nigerians, which would require gypsum resource as one of the major raw materials for the project. Meanwhile, the foreign technical partner from Israel, Mr. Joseph Raz said his company was in partnership with Ojim Royal Investment and Property Limited to develop 20 million housing units across the country at the cost of$100 million. Raz said the project has six plants with the capacity of 600-700 tonnes of gypsum per annum that will meet the demand of the project.
Nigeria can eradicate poverty by 2020 — NOTAP boss By FAVOUR NNABUGWU
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fforts by the Federal Government can be complemented by Nigerians to eradicate poverty in country by 2020, Director-General, National Office for Technology Acquisition and Promotion, NOTAP, Dr. Umar Bindir has said. Speaking at the 2014 Engineering Week and annual general meeting of Abuja branch of the Nigerian Society of Engineers, NSE, in Abuja, Bindir said the nation was blessed with most of the needed resources, The NOTAP boss who stressed the importance of networking and generally harnessing and improving those inherent skills for the good of all, also outlined how the country can industrialise within the shortest possible time. He called on the government to declare Agbara Industrial Layout in Ogun State, the petrochemical complex at Eleme, Rivers State, and other similar groups of technologically-driven set ups as industrial parks. Explaining how the country can be rid of poverty, he said it is by using what we have to get what we need, and assured that all Nigerians could have three square meals daily, have access to quality healthcare and education, among others. Bindir said since doctors were warning against fatty foods, the hide of cattle, commonly called ponmo, could be properly processed to the point that C M Y K
it would appeal to Japanese and other foreigners. That way, he said, it would become a global franchise, one of the hallmarks of an industrialised nation. He also said Nigerians could beat the ebola virus without compromising our love for bush meat by domesticating the animals such as grasscutters. According to him, “this was essential so as not to jeopardise the livelihood of hunters whose businesses are threatened by the hue and cry of avoiding bush meat following the ebola virus disease outbreak. Every product that is not well-branded, well packaged, well managed and well marketed cannot sell,” he said. “All I am saying is that in Africa, we have over 30 million people who are in love with bush meat and grasscutter is one of them. Nigeria should not lose that kind of market and industry just because somebody has brought a disease that we have managed now to control. We have the techology to domesticate grasscutters. This means we can control the production of grasscutters or bush meat.” Still on poverty, Bindir explained: “There are two levels of poverty absolute poverty, meaning children having access to basic education, mothers having access to basic healthcare, people drinking clean water and living in decent houses. “These are eradicable. What you can’t eradicate is not absolute poverty but relative poverty.”
Vanguard, MONDAY, SEPTEMBER 1, 2014 — 21
Business & Economy
UniCem sensitises customers on use of 42.5R cement grade By TOM MOSES
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nited Cement Company of Nigeria Limited (UniCem), Nigeria’s third largest cement manufacturers has educated customers and end users of cement in Akwa-Ibom on the use of the recently promoted 42.5R cement grade in the market. UniCem in a trade forum held in Uyo, the Akwa-Ibom State capital had in attendance, the company’s products end users: (Customers, Contractors. Masons, and Block Makers) to share information on product’s application. According to the Marketing Director of the Company, Mr. Vipul Agrawal, “Our objective is to reinforce good service, product quality and strengthen relationship with our customers by educating them on the best way to use the product to achieve good result. “This event is one way through which we engage our customers and part of our
strategy to reach 5,000 end users this year with information on product application as well as strengthening our partnerships in the SouthSouth and South-east regions. “This is part of the on-going training of block makers, artisans and masons and engagement of business partners”, he said. Speaking at the event, the Technical Services Engineer of
UNICEM, Mr. Bukola Adebisi explained that the company had since been producing the 42.5 cement grade but was only available on demand to specialists who understand its technical applications. According to him, as a responsible company with international best practices in the industry and in order to meet the new market demand in Nigeria, UniCem is set to make available the 42.5grade
of cement in 50kg bags. “The 42.5 grade will be available alongside the 32.5 grade with detailed instructions on the bags on how to apply each”. “There have been insinuations at recent on collapsed buildings and cement products which should be known that cement is never the cost of collapses buildings but the activities in the informal sector.
“Cement in itself does not translate to end product; it is just the constituent part. In essence, we are here to tell our end users how to use the product to get the best out of the cement”, he stated Adebisi corroborated the report by the Standard Organization of Nigeria (SON) that there was no substandard cement in Nigeria in the market today noting that the product itself was not the problem but the application of the product. “If you try to cut corners by patronizing unskilled people without technical know-how eventually, you will have to pay for it.
ICRC lists challenges facing infrastructure development I nfrastructure Concession and Regulatory Commission (ICRC) said lack of continuity in governance and unacceptability of PublicPrivate-Partnership (PPP) as procurement alternative were major challenges facing infrastructure development in Nigeria. The Director-General, ICRC, Alhaji Aminu Dikko, disclosed this in the 2013 annual report of the commission in Abuja. The report quoted Dikko as saying that PPP arrangement
had the potential of leapfrogging the country ’s infrastructure potential but regretted that it was suffering some setback. “The approach has some daunting but not insurmountable challenges such as acceptance of PPP as a veritable procurement alternative, lack of continuity following change in leadership and inadequacy of budgetary provisions,” he said. According to him, absence of a stable and affordable long term financing is also another big challenge to
infrastructure development in the country. He called for long term infrastructure fund sourced from international and domestic markets to help attract more investors. These assets can be tapped domestically from funds reposed in the country ’s banking sector, sovereign wealth fund, pension funds, insurance funds and tax revenue. “This will go a long way in ensuring the huge opportunities for infrastructure investments in all sectors of the
economy are realized,” he said. Dikko said that the Federal Government had demonstrated the political will towards transforming the infrastructure landscape with the introduction of National Integrated Infrastructure Master Plan (NIIMP) as primary source for PPP project development. According to him, a lot of savings can also be made through efficiency gains in the utilization of existing infrastructure, mainly through maintenance.
22 — Vanguard, MONDAY, SEPTEMBER 1, 2014
Banking & Finance
FCMB rewards promo reloaded winners
F
irst City Monument Bank (FCMB) Limited, continues to keep its promise to reward its customers through its 30 thAnniversary Promo Reloaded activity after a nd successful 2 promo draws held across all its regional and zonal operations nationwide. FCMB has so far rewarded several customers with cash prizes, LCD TV sets, DVDs, GOtv decoders and generators,won in the monthlyelectronic selections ahead of the grand presentationof three brand new SUVs to lucky winners who will emerge at the end of the promo in September. Meanwhile latest customers to win the monthly star prizes of N1, 000,000 are Mr. Ose Idasho (Northern Region), Ekemini Moses (South east/ South south) andHon. HamzatGaniyuOladunjoyefrom the Lagos and South west region.
NIM tasks new fellows on ethics By WILLIAM JIMOH & LIGALI ABDUL-LATEEF
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he Nigerian Institute of Management (NIM) has urged its members newly conferred with the prestigious designation of Fellow of Nigerian Institute of Management (FNIM) to sustain the tradition of uprightness and excellence which the institution symbolizes. President and Chairman of NIM Council, Dr. Nelson Uwaga made the appeal while conferring the honour on 48 new fellows during this year ’s Awards, Fellows and Spouses’ Day Luncheon held in Lagos, admonishing them to see the new designation as a call to deeper commitment to service of the institute and society at large. Uwaga who described this as a privilege on the part of the new fellows also tasks them not to see “this designation as an end in itself, rather as a call to higher service to the institute, the management profession and the nation. Speaking further he said, “I implore the recipients not to be contended with just adding designation (FNIM) to their name but to see it from this day forward that their time, talent, treasure and thinking are required more in service to the institute and mankind.”
LAUNCH: From left, Mr. Olu Akanmu, Senior Vice President/Divisional Head of Retail, Mr. Lad Balogun, GMD/CEO, First City Monument Bank Limited, Olufemi Bakre, Executive Director, Lagos/South West, all of First City Monument Bank Limited, at the Launch of the Bank’s 30th Anniversary Promo.
Cashless: NIMC, Unified Payments partner on National e-ID cards Stories by BABAJIDE KOMOLAFE
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he cashless policy received a boost last week with the announcement of a partnership between National Identity Management Commission (NIMC) and Unified Payments for Processing in the payment application in the new National Electronic ID Card (eID). In a statement announcing this development, Unified Payment said that, “With the eID card, citizens will have the ability to deposit funds, receive social benefits, pay for goods and services at Merchant locations within and outside Nigeria as well as draw cash from ATMs around the world. Under the processing arrangement, citizen’s identity data will be hosted and managed exclusively by NIMC while payment data will be hosted and managed by Nigerian banks and Unified Payments, a leading payment transaction processing company owned by Nigerian banks.” In his remark, Mr. Agada Apochi, Managing Director and CEO of Unified Payments commended NIMC for the bold step and the technological achievement, saying that “this initiative will no doubt help to drive financial inclusion as well as further stimulate economic
activities in the country in line with the Vision 2020 agenda”. Barrister Chris ‘E Onyemenam, Director General and CEO of NIMC, said: “Unified Payments was chosen as the pilot processor of the payment aspect of the card based on its exceptional track record. Being the first Processor in Nigeria certified
to process EMV chip cards, the first to achieve the Payment Card Industry Data Security Standard (PCI-DSS) certification as well as its ownership by Nigeria banks, it only made logical sense for us to entrust them with securely processing the payment application in the National Identity Card”.
Unified Payment Services Limited otherwise known as Unified Payments® is a cardneutral and option-neutral Payments Service Provider founded in 1997 and owned by a consortium of leading Nigerian banks. Unified Payments prides itself in Leadership & Innovations in Payments being the first Nigerian organization to (i) be licensed as Principal Member of a global payment scheme (ii) Acquire EMV transactions (iii) be certified as EMV 3PP Processor; and (iv) acquire and process transactions based on Near-FieldCommunication (NFC) technology. Unified Payments® operates as a shared infrastructure for the banking community in Nigeria and Payments Service Provider within and outside Nigeria, with a mission to be the most preferred e-payment service provider in AfricaThe major businesses of Unified Payments include (i) Processing (ii) Switching (iii) Acquiring (iii) Payment Terminal Service Provider (PTSP); and (v) Value-Added Services and Solutions. The National Identity Management Commission (NIMC) was established by the NIMC Act No.23, 2007 as the primary legal, regulatory and institutional mechanism for implementing a reliable and sustainable national identity management system that will enable Nigerian citizens and legal residents assert their identity.
ACCA advocates collaboration to grow accountancy profession
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ssociation of Chartered Certified Accountants (ACCA) has called for collaboration among stakeholders to enhance the growth of the accountancy profession in Nigeria. Head of ACCA Nigeria, Mrs. Toyin Ademola made this call while addressing journalists at the sidelines of a meeting of partner universities and tuition providers organised by ACCA. She said that with a population of about 177 million, the focus of accountancy bodies in the country should be collaboration and not competition. Ademola said “In a country of 177 million people, it is not about competition, it is about growth, it is about delivering value. After all in the UK you have several accounting bodies. And we can see what they are doing for the English economy. And it is the same thing in America, the same thing in Australia. “We at ACCA, we are not looking at it as competition, though we have professional bodies, the same way we ask universities to collaborate with each other, the same way accounting bodies should collaborate with each other. Each body should be able to say these are our
weaknesses and strength, and the fact is with a 177 million people, there is a lot in the market to develop as accounting professionals” Ademola said that the uniqueness of ACCA is that it is global accounting body, and its members can work in any country in the world. She said that it is not true that people with ACCA qualification cannot work in Nigeria, or that they have to write another ACCA exam in order to work anywhere in the world. People with ACCA qualification can work as accountant in Nigeria, and elsewhere in the world. The same ACCA certificate issued to people in Nigeria is the same certificate issued to people in other countries. There is no ACCA Nigeria certificate or ACCA West Africa certificate. This is because it is the same ACCA examination that people write across the world and at the same time. Ademola said that ACCA Nigeria organised the forum so foster collaboration between its partner universities and its tuition providers. “The event today is called Key Decision Makers Mixer and it is a combination of our partner universities as well as our tuition providers.
Vanguard, MONDAY, SEPTEMBER 1, 2014 — 23
Banking & Finance
Board sacks MINT's executive management By PETER EGWUATU
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HE Board of Directors of the Nigerian Security Printing and Minting Company, NSPM, Plc, yesterday, announced the dissolution of the Executive Management of the company and directed the current Acting Managing Director and two Executive Directors to retire with effect from
Monday, September1, 2014. The Company Secretary/Legal Adviser, Mr. Lawal Adamu, who disclosed this in a statement made available to Vanguard said “The Board has approved the appointment of Mr. Joseph Ugbo as substantive Managing Director/Chief Executive Officer and Alhaji Umar Masanawa as Executive Director in charge of Finance and Strategy of the company.”
He stated that the changes were in line with the new strategic direction of the company aimed at repositioning the NSPM Plc as an efficient and profit – oriented company that would serve, not only the Banknote and Security needs of the country, but also those of West African sub-region. Profile of the new appointees show that Mr. Ugbo is a seasoned Chemical Engineer, with
over 29 years of engineering and managerial experience and with international reputed manufacturing companies. Prior to his appointment, Mr. Ugbo had worked in various levels and countries of Unilever Plc and rose to the position of Head of Manufacturing, where he coordinated all General Managers in Manufacturing in the entire company. From
2009 to 2014, he was General Manager of Dangote Flour Mills Plc in Calabar. Mr. Ugbo obtained his Bachelor degree in Chemical Engineering from University of Lagos in 1982 and an MBA from the Lagos State University in 1999. He has also completed extensive trainings in Banknote Production and Security Printing from the Royal Joh. Enschede in The Netherlands. On the other hand, Alhaji Masanawa has
over 17 years of cognate banking experience and rose to the position of Deputy General Manager in Zenith Bank Plc. Prior to his appointment; he was Special Assistant to the Governor of the Central Bank of Nigeria. Masanawa holds a Bachelors Degree in Agricultural Economics from Ahmadu Bello University and an MBA in Finance from the University of Maiduguri. He has also completed courses and programmes from the Harvard Business School, London Business School, and the University of Oxford.
First non-bank credit card debuts in Nigeria T
HE Central Bank of Nigeria (CBN) ’s cashless initiative has received greater boost as a Lagos based company, 03 Capital Nigeria Limited introduced the first non bank based credit card in the country. The launch of the scheme is historic as it led to Nigeria’s commencement of credit card system without linkage to any bank. Chief Executive Officer, 03 Capital Nigeria Limited, Mr. Abimbola Pinhiero, while introducing the cards, said “In Nigeria today we have about 100,000 bank based credit cards. When we compare it with our population of over 160 million, you will agree that a lot more is still needed to capture the entire people. There is no risk without a reward. If we as Nigerians don’t take risks, our economy will not develop. It is our philosophy that every Nigerian would have credit card in their wallets. We cannot develop without a credit card system. He explained that “the credit card works on the Interswitch network which means they can be used on all Automated Teller Machines, ATMs, Point of Sales Terminals, POS and Nigerian internet payment sites in Nigeria. The main strategic thrust of the company is issue naira denominated credit cards with limits ranging from N100,000 to N1,500,000. Our mission is to ensure that the average Nigerian is not cash strapped but can have access to funds to meet their day to day needs.” While also endorsing the product, Mr. Tope Adebayo, a representative of NIBBs, said “ NIBBs has been partner of progress with almost all the banks in Nigeria. There have been collaboration with the banks and other institutions to develop this product. We need collaboration to make our system work well. This product is roburst and need the collaboration of all stakeholders to make it succeed.” The Chairman of 03 Capital Nigeria Limited, Mr. Bode Emmanuel at the official launch of the credit cards said “This is the first time the country will have a proper credit card system, all other cards by banks are not credit card in the real sense but debit cards. So, the 03 Credit Card is the real credit card and has come to stay. Where ever a credit card has started all over the world it began in a small way before spreading. This is the first time in Nigeria that we are going to have a proper credit card system. It is something that is going to develop the economy. I commend the management for the foresight especially the managing director.” Speaking as well, Mr.Tunde Popoola , CRC Credit Bureau Limited said “We congratulate Mr Abimbola and his team for a job well done. It is on threshold of history with the launch of credit card. C M Y K
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Corporate Finance
Ecobank unveils deposit promo Ecobank Nigeria has announced the commencement of a new deposit promo, with millions of naira as prizes for winners. Tagged “Giant Prize Give Away” the promo is for current and savings accounts holders and it runs from September 2014 through February 2015. The promo gives participating customers the opportunity to win over N10 million cash prizes and other rewards at both bi-monthly regional draws and grand draws through to the end of the promotion in February 2015. Unveiling the promo in Lagos, Deputy Managing Director, Ecobank Nigeria, Tony Okpanachi, said the bank decided to run this second edition of the Giant Prize Give Away promo following the success and testimonials recorded in the previous edition. He noted that feedback from customers was positive and impressive, adding that the promo is also the bank’s contribution towards the financial inclusion strategy of the Central Bank of Nigeria (CBN). “This is one of several ways to reward our loyal customers even as we offer them the best of banking services. It is also to encourage savings culture in the country. "
10 stockbroking firms net N15.20bn transaction in one week By NKIRUKA NNOROM
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0 out of the 321 stockbroking firms operating in the Nigerian capital market accounted for N15.203 billion of total transactions value carried out in the market for the week ended August 22, 2014, data from the Nigerian Stock Exchange, NSE, has shown. According to the data obtained by Vanguard, their contribution represented 61.59 percent of total value traded within the period.
Breakdown of their individual contributions indicate that Rencap Securities (Nig.) Limited pooled the highest transaction, posting N4.74 billion total transaction or 19.20 percent of value traded in the market. CSL Stockbrokers followed with N2.880 billion or 11.67 percent; Stanbic IBTC Stockbrokers was the next with N2.131 billion transactions, which represents 8.64 percent of the total value traded in the week, while FBN Securities and Partnership Securities
accounted for N1.74 billion or 7.06 percent and N768.501 million or 3.11 percent of the total value respectively. Others were Chapel Hill Denham Mgt. Limited, which posted N750.715 million or 3.04 percent of the transaction value; Vetiva Capital Mgt. Ltd with N724.199 million emerged seventh on the list; Cardinalstone Securities Limited pooled N538.336 million, while Marina Securities Stockbroking Serv Ltd and Cordos Capital th emerged ninth and 10 in the list, accounting for
Women tasked on developing SMEs skill By WILLIAM JIMOH
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ormer First Lady of Cross River State, Mrs. Onari Duke, has admonished women in Small and Medium Enterprises, SMEs across Nigeria to embark on skills developing ventures, as a way of deepening their business portfolios. Mrs. Duke made the call while addressing women at the maiden edition of GLEEHD Women in Business and Leadership Summit in Lagos, where she acknowledged continuous training and knowledge acquisition as core strategy for business development and growth. Duke, who is also a member of the foundation’s advisory board, said it is obvious that a great chunk of Nigerian women currently have one micro business or the other, saying it is imperative for them to enlarge their structures and strategise to enable them build their business into a slightly bigger business portfolios. “Nigeria is not devoid of women in business, but what we are looking at now is a way to help more women grow their business skills." C M Y K
MEETING: From left, Managing Director/CEO, Heritage Bank Plc, Ifie Sekibo; Chief Compliance Officer (CCO), Standard Chartered Bank, Siji Adeyinka; CCO, Diamond Bank, Isioma Gogo-Anazodo; CCO, Heritage Bank, Prince Akamadu and CCO, First Bank of Nigeria, Uduak Nelson at the monthly meeting of Chief Compliance Officers of Banks in Nigeria hosted by Heritage Bank in Lagos.
N485.364 million or 1.97 percent and N441.048 million or 1.79 percent transaction value respectively. On the other hand, the top 10 dealing member firms also accounted for 48.57 percent or 1.001 million units of the total volume traded within the same period with CSL Stockbrokers topping other with 196.670 million units or 9.54 percent of the total volume traded within the week. Renacp Securities placed second with 136.769 million units or 6.64 percent of the total volume; Stanbic IBTC Stockbrokers followed with 118.867 million units; FBN Securities accounted for 117.865 million shares; CardinalStone Securities accounted for 102.586 million units, while Resort Securities & Trust accounted for 86.868 million units. The duo of Vetiva capital and Chapel Hill Denham were responsible for 142.63 million units traded within the week, while Marina Securities Stockbroking Services and Meristem Securities Limited were the last on the top 10 dealing firms in volume terms with 51.046 million units and 48.051 million units respectively. However, there is a general feeling in the market that most of the stockbroking firms listed by the NSE as top 10 either value or volume terms are the ones that have foreign affiliates and are favoured by foreign and institutional investors.
Linkage Assurance shareholders demand dividend payment By WILLIAM JIMOH
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hareholders of Linkage Assurance Plc have appealed to the management of the company to ensure proactive measures in the running of the company’s affair in a bid to reposition the company for profitability and deliver value to the shareholders. The investors made this call at the th company ’s 20 Annual General Meeting, AGM, in Lagos, expressing dissatisfaction with the company’s inability to declare dividend over the years, despite the huge working capital it currently hold. Chief Timothy Adesiyan of National Solidarity Shareholders Association, NSSA, Mr. Nona Awoh, Mrs. Easter Augustine and Mr. Michael Cole who spoke on behalf of the shareholders all
charged the Board of Directors to adjust its strategies, saying this alone would enable it operate profitably considering the level of competition in the market. According to Mr. Awoh, for a company with financial assets of N13.65 billion, total assets of N17.74 billion to record a profit before tax of N563.1 million without any dividend declaration is not a good development. According to him, “It is not that we do not have the needed money to operate, but what we are doing with the money is what the shareholders do not know. If we continue to grow at this pace, it will take us more than four years to attain a mega company, which is the only time we can declare dividend. “We are not optimising our assets and resources, making us to
underperform. “Somebody should be able to do something to make sure that we get out of this. The sales that we made during the year under review doubled the profit that was made. One tend to ask if we are looking at the other insurance companies that do not have as much capital as we do, but still declare dividend no mater how small. Why should ours be an exception?” In his own view, Chief Adesiyan urged the Board of Directors to major on the areas of its strength which includes oil and gas and do less of accident and fire insurance which are not yielding result as expected. “Though the account we are considering today shows an improvement from what we had last year, it is still not good enough to give use returns,” he added.
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Micro-Finance
Commodity Index Aug 22 - Aug 28, 2014
IFRS: ICAN builds capacity of audit committee members Stories by PROVIDENCE OBUH
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he Institute of Chartered Accountants of Nigeria (ICAN), engaged members of audit committee of quoted companies in Nigeria on modern tools and skills needed to keep abreast on the workings of International Financial Reporting Standards (IFRS), in order to build capacity. Speaking at the capacity building programme with the theme: “Intensive IFRS Training For Members of Audit Committee of Quoted Companies in Nigeria,” President of the Institute, Mr. Chidi Ajaegbu, said that the training is part of effort to impact on members and non members, the participating audit firms and the regulators on the ability to discharge effectively their statutory duties. He said, “It is instructive to note that the world is a global village
and globalization is a trend in business that cannot be ignored. Consequently, the important of implementation of IFRS cannot be over emphsised.” In his presentation, Senior Manager, Ernst &Young, Mr. Jamiu Olakisan, highlighted how audit committee members can fulfil their statutory functions during IFRS regime as follows: as financial reporting becomes more complex, the audit committee determines whether the financial statements are understandable and transparent; consider whether the company reports information that is reliable and understandable; review significant financial reporting and regulatory developments, including their effect on the financial statements and on the company’s resources. He added that the audit committee’s role is to review and challenge, where appropriate, the company’s assessment of
its risk profile and determine that risk management processes are in place. He explained that IFRS is a principlesbased standards which requires estimate/ judgment to include: Impairment of financial assets (Estimating future cash flows arising from impaired financial assets); Impairment of non-financial assets (Estimating value in use, determining fair value in a market like Nigeria); Defined benefit plan and other long term plan actuarial valuation (Assumptions used by the actuary); Deferred tax asset recognition (Recoverability of the deferred tax asset); Fair value measurement (Assumptions for assets not traded in active markets); Determination of control for the purpose of consolidation (It is possible for the party having less than 50 percent of the equity interest in another entity to be the controlling party).
CICAN to brainstorm on SMEs development
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he Commerce and I n d u s t r y Correspondents Association of Nigeria (CICAN), is set to brainstorm on the potentials of Small and Medium Enterprises (SMEs) as engine of growth and development. Meanwhile, Minister of Industry, Trade and I n v e s t m e n t , D r. Olusegun Aganga is to be given a Life time Achievement Award for his commitment to enterprise development in Nigeria. Other awardees include: the Minister of Agriculture and Rural Development, Dr Akinwunmi Adesina, Executive Governor of Katsina State, Alhaji Ibrahim Shema and Special Adviser on Media to the Minister of Industry, Trade and Investment, Mrs. Yemi Kolapo. In a statement signed by the Chairman of the Association, Mr Oloruntoba Agboola, he C M Y K
said that despite the importance of SMEs as engine of growth and development, they are constrained by some challenges such as lack of infrastructure, weak operating capacities in terms of skills, knowledge and attitude, inaccessible to finance, poor information technology, lack of safeguards against occupational health and environmental hazards, multiple taxation, just to mention a few. Agboola said that the event will also feature the 4th Edition of CICAN Nite of Excellence where those who have made a remarkable impacts toward the growth and development of the economy will be will be honoured. Aganga will give the keynote address at Gala/ Award Nite while the lead speaker at the workshop is the Managing Director, Bank of Industry (BOI), Mr Rasheed Olaoluwa. Other speakers include,
DirectorGeneral; Industrial Training Fund (ITF), Mrs. Juliet Chukkas-Onaeko Director General, SMEDAN, Alhaji Masari Bature. Shema is the Special Guest of Honour , other special guests are Director-General, Manufacturers Association of Nigeria (MAN), Mr Remi Ogunmefun; President, National Association of Chambers of Commerce, Industry, Mines & A g r i c u l t u r e (NACCIMA), Alhaji Mohammed Abubakar, President, LCCI, Mr Remi Bello, Former Minister of Commerce and Industry, Mrs Nike Akande, Director General, NACCIMA, Dr Joseph Isemede; DirectorGeneral, Standard Organisation of Nigeria (SON),Dr Joseph Odumodu, Director General, LCCI, Mr Muda Yusuf, among others.
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Homes & Housing Finance
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he Federal Government has invited developers and investors interested in being considered for the development of the pilot 10,000 housing project under the mortgage refinance scheme of the Nigeria Mortgage Refinance Company (NMRC) to present their technologies to enable them participate. The Ministerial Committee on Presidential Initiative on Delivery of 10,000 Housing Units said that interested parties are expected to apply on or before September 3, 2014. This was stated in an advertorial signed by the Permanent Secretary, Federal Ministry of Lands, Housing and Urban Development. “Expression of interest (EOI) is hereby requested from developers, investors and companies with special building products, for presentation of their technologies to enable them participate in the provision of affordable 10,000 housing units under the Mortgage Refinance Scheme of the Nigeria Mortgage Refinance Company (NMRC). “Interested entities will be considered based on preferred technologies/new building systems that are: sustainable; cost effective; durable; environment-friendly; adaptable and in compliance with global standards/best practices; amenable to local labour and appreciable local content; and with low postconstruction maintenance cost. Other eligibility criteria for the participation of developers, investors and
RBS fined £14.5m for bad mortgage advice
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•Compact and functional housing
10,000 MORTGAGES: FG invites developers with special technologies By YINKA KOLAWOLE manufacturers/suppliers of special building products include: ownership of the technology or being its accredited agent; technical capacity to execute the project; financial capacity to execute the project on off-take agreement; evidence of successful execution of similar projects in the past and
location of the projects; readiness to participate with indigenous developers and domesticate technology, in the case of foreign-based entities; and evidence of incorporation,” it stated. Membership of the Ministerial Committee includes representatives of Federal Ministry of Finance, Federal Ministry of Lands, Housing and Urban
Group backs commercialisation, recapitalisation of FHA By FAVOUR NNABUGWU
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he Senior Staff Association of Communications, Transport and Corporations, SSACTAC, has declared support for ongoing moves to fully commercialise the Federal Housing Authority, FHA, to enable the agency deliver on its mandate in the housing sector. It also called on the Federal Government to adequately fund the housing authority to ensure effective sustenance and boost housing delivery in the country. SSACTAC President, Muhammad Yinusa, who spoke to Vanguard after the associations’ national executive council meeting in Abuja, urged the government to free its hands from the operations of the agency and
allow it to function like a private enterprise. He noted that FHA had failed to deliver on its core mandate of housing provision for the low income earners in the country because of inadequate funding and unnecessary interference from the nation’s successive government. Yinusa asserted that recapitalising the agency would enable it provide houses for the low income earners who cannot afford to buy houses in the open market. “The bane of the FHA has been government interference and lack of adequate funding. For instance, from the inception of the agency till date, the funding has been so poor such that it has stagnated most of its housing projects across the country. While we support the ongoing process of a full commercialisation, we also
urge the federal government to provide it with the needed funds to carry out its programme in the housing sector,” he noted. Minister for Lands, Housing and Urban Development, Mrs. Akon Eyakenyi, recently hinted that FHA would soon be commercialised, noting that the move is to strengthen the authority so that it would be able to live up to its responsibility.
Development, CBN and NMRC. Recall that the Federal Government recently launched the 10,000 mortgages scheme in partnership with the private sector operators - commercial and mortgage banks - who are members of NMRC to assist Nigerians acquire their homes through well priced and long term mortgage finance. The scheme is meant to make mortgage more affordable due to a longer tenor of up to 20 years and convenient due to the more economically viable interest rate being targeted. It is currently aimed at low to medium income earners who want to buy owner- occupier homes of no more than N20 million in value. Eligibility criteria for registration in the scheme include: must be a Nigerian citizen; must be an owneroccupier property (that is must live in the property); must be a least 21years old; must earn regular income; must be tax compliant and; must be able to pay a minimum down payment of 20 percent of the value of the property being bought.
oyal Bank of Scotland has been fined £14.5million for giving unsuitable mortgage advice to tens of thousands of its customers. The Financial Conduct Authority (FCA) said the sales processes of RBS and subsidiary NatWest were not ‘fit for purpose’ and listed a series of astonishing failings that lasted until March 2013. FCA said that about 30,000 customers were exposed to unsuitable advice. RBS has agreed to contact them to ask them if they have any concerns. In one case an adviser told a customer interest rates could hit 5.5 percent and recommended they lock into a more expensive fixed-rate loan for five years. Advisers also routinely failed to check whether households could afford to repay their loans. This included older customers who were set to retire before the end of the term of the mortgage.
Russian bank offers ‘free cat for mortgage’
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n what has all the marks of a publicity stunt, Sberbank, one of Russia’s largest banks, says every new mortgage customer can choose the cat they want, and it will be delivered in time for their housewarming party, the TJournal website reports. The bank’s website gives a choice of 10 breeds, and features a video showing the first happy clients receiving their cats. It’s an advertising campaign thought up by a local agency, and reportedly features delivery vans with cat logos cruising the streets of Moscow. The bad news for customers is that they won’t be able to keep their feline. Terms of the offer say that the animal is only given so that it is the first to cross the threshold of the property - many Russians say a cat is sign of good luck to those moving into a new home - and is only available for two hours so the home-owners can take photos.
RTEAN, foreign firms partner to build 185,000 houses
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he Road Transport Employers Association of Nigeria (RTEAN) is set to collaborate with foreign partners to build over 185,000 housing units across the country for its members. To this end, RTEAN has already worked out modality for funding the project, which is expected to be undertaken through direct
labour within a year from the date of take off. The project which is estimated to cost $1.5 billion (about N240 billion) is to be executed in collaboration with Havit Incorporated of the United States of America and JS Neoplans, working with Artemis Angels Global Limited. C M Y K
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Tax Matters
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isk profiling can be defined as an evaluation of an individual or organization’s willingness to take risks, as well as the threats to which a company or organization is exposed. The risk profile will outline the number of risks, type of risks, and potential effect of the risks. This outline allows a business to anticipate additional costs or disruptions to operations. It also describes how those risks will affect the operational strategy of a company. TAX RISK MANAGEMENT Risk has been defined in the European Commission’s guide on risk management for tax administration (fiscal guide) as: “Anything negative that can affect the organization’s ability to achieve its objectives.” On this basis, ascertaining the objectives of the organization in question is critical to the question of risk management. The objectives of taxpayers and the tax administration will not be identical and will sometimes conflict, although at other times they may overlap. Corporate taxpayers may have a range of tax strategies depending on their tax philosophy. Most large corporations will want to balance profit maximization with other objectives, which include the reduction of risks such as unsatisfactory compliance which might retain reputation and the cost of dispute to the revenue authorities. They will also want to steer clear of too much volatility a reported profit, since this is disliked by the market. What they consider to be the correct balance between these factors will depend on the overall business and risk philosophy of the board of directors as filtered through to the tax department. The risk outlined will be dealt with by internal risk management and control of decision making within the context of broader controls exercised by the company. From the perspective of tax administrators, the relevant risk is the institutional risk of the revenue authority not achieving its objective of tax collection. Four broad categories of risk for the revenue authorities and government have been identified. These are unrelated to the risk that the expected level of revenue will not be collected. They have been identified as: i. Register risk the risk that tax yield is reduced by inaccuracies in tax registration; ii. Filling risk - the risk that the tax yield will be reduced by failure of taxpayers to file their returns; iii. Payment risk - failure to pay amount due; and iv. Declaration risk - where returns are incorrect due to errors or a deliberate act. All these risks have to be tackled with limited resources so those resources must be allocated efficiently to where they will have the best impact. It is the last of these risks which is of greatest importance in relation to large corporate taxpayers. The vast majority of corporations will wish to ensure that they have good systems in place for reporting and paying the tax which they believe is properly due within the law. The key risk for the tax authority lies in system failures and also in the areas of uncertainty and lack of agreement in relation to the amount tax payable. In this context, the risk borne by the tax authorities may be considered by them to include the risk of what the fiscal guides calls “barely legitimate tax avoidance.” There will be grey areas where the corporate taxpayer may believe that its actions are within the law but where the revenue authority takes a different view. There is a risk to revenue authorities of collecting less tax than they expected on their interpretation of the law, even if their interpretation comes out to be incorrect according to the court. It may be seen by the tax authority as creating a tax gap. COMPONENT OF RISK PROFILING FOR A COMPANY TO BE OBSERVED BY THE TAX OFFICER. 1.0 Background information; This is the basic information considered by the tax officer. Tin Number e.g. 00000001-00 Name of Company e.g International Nigeria Limited Turnover e.g N42,373,115,000 Registered Address e.g. Km 16, Yasmin road/ Halifa Express Way, Dutse, JIgawa. Date of Incorporation e.g. 29 th August 1995 Date of commencement e.g. 1st November 1995 Nature of Business e.g. Provision of oil field transit and supply base facilities to the oil and gas
Effective strategies and techniques of risk profiling of a company due. 9. Result of previous tax audit exercise (additional taxes):- this means to indicate whether a tax audit exercise was taken in previous years or not. 10. (I) Cost of sales =opening stock + purchase – closing stock or cost of sales = purchases. Therefore, cost of sale turnover= Cost of sales/turnover x 100/1 = % (II) Tax assessed Turnover = Tax assessed/Turnover x 100/ 1=% (III) Equity Debt Ratio = equity/debt X 100/1 = % Equity: - means anything belonging to owners of the business Total Debt: - long time liability + current liability (IV) Net profit Turnover = net profit/turnover x 100/1 = % (v) Current asset/Current liability = current assets/current liabilities X 100/1 =% (VI) Liquid Assets ratio or acid test ratio = current assets-stock/current liabilities x 100 /1 = % (VII) Gearing Ratio = Equity Ratio. Therefore, Gearing Ratio = Equity/Assets x 100/1 = %
Industry. Accounting Date Accounting Year
e.g. e.g.
31st December
1 st January – 31 st
December
Share Capital (Authorized and Issued) YOA e.g. 2012 2011 Director’s Report Attached Yes Auditors Report Attached Yes Last Tax Audit e.g. 2008 – 2010 YOA (Criminal Investigation)
1.1 Auditor & Tax Consultants Auditor: Khairat Muhd & Co. Address: 6th Floor, Sadiq House, 15b Muhd Abubakar Street, Gwarmai. Phone234 (1) 22222222 Email khrrrrrrrrr@yahoo.com Change of Auditor No Old Auditor No Date of Change No Tax Consultant Khairat Muhd & Co. Address: 6th Floor, Sadiq House, 15b Muhd Abubakar Street, Gwarmai. Phone 234 (1) 22222222 Email: khrrrrrrrrr@yahoo.com Change of tax consultant No. Old Tax Consultant No. RISK ITEMS 1. Date of commencement of business:- This means, the date the company started operations 2. Size of business:- This means the capacity of the business in terms of turnover, level of tax assessed, number of staff, number of branches and or subsidiaries 3. Change in tax consultant: - This means whether a company has changed the existing tax consultant to another one e.g. from Muhd & Co. to Abba & Co. 4. Change in auditors: - This means whether a company has changed the existing auditor to another one e.g. From Zarewa & Co. To Yesmin & Co. 5. Qualification in audit report: - Any report called qualified audit report means that the report is not acceptable for tax return purposes. Therefore, the analysis should indicate the qualification or otherwise of the report. 6. Accounting system computerized:- This is to indicate whether the company is using of computerized system of accounting records or not 7. Accounting system manual:- This is to indicate whether the accounting system of the company is manually computed or not 8. Taxpayer’s compliance submission of returns (timeliness):- this is to indicate whether the taxpayer is complying with submission of tax returns as and when
Turnover This is to ascertain whether there is a change in the level of turnover between the last year and the year under review; and to determine the level of changes thereon in percentages. Also compare the business turnover with the industrial average. Cost of Sales/Direct Cost This is to ascertain whether there is a change in the level of cost of sales between the previous year and the current year and the level of changes thereon. Also to compare the business cost of sales and that of industrial average. Admin/ Operating Expenses This is to identify the changes in the admin/operating expenses of the years and make comparism between the current year and industrial average. Operating expenses:(a) Total operating expenses to line of industry average: - This is to make comprises with that of industry average. (b) Salary and wages to line of industry average: This is to make comprises with that of industry average. (c) Interest on loan/Bank charges to line of industry average: - This is to make comprises with that of industry average. (d) Repairs and maintenance to line of industry average: - This is to make comprises with that of industry average. 11. Debtors & Creditors Does the company have high amounts of debtors and creditors in it accounts for the period under review? The gross amounts may increased by some % of the previous years’ figure. • Related Party Transaction Does the company have huge amounts stated in the debtor and creditors figure as amounts owing and due to associated company. If yes the figures should be critically reviewed as this might be a means to transfer fund to associated companies. Level Gearing Position Gearing ratio for the company should be computed to discover whether the debt/ liabilities owed by the company far exceeds the capital employed for the all years in the period under review. This might indicates that the company rely on huge borrowings or advances from third parties or related parties to carry out its operation. This might spell doom to the company in future and also loss of revenue to the FIRS if outstanding taxes are not collected soonest. 12. Company management •Mgt by owners: - this is to indicate whether the company is managed by owners of the business or not. •Mgt by others: - this is to indicate whether the company is managed by others or not. ? Change in mgt: - this is to indicate whether there is change in management of the company who manage the activities of the company.
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People in Business
A nation that can't feed itself is dead — RUFUS OLOPADE
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ngineer Rufus Olopade is the Chairman and Chief Executive Officer of Sabina Pad Enterprises Limited, a limited liability company specialising in providing top quality livestock feeds, aquaculture feeds, poultry feeds, dog feeds, raw materials as well as sales of poultry and fishery equipment. Sabina Pad was founded by Engr. Olopade and his wife, Mrs Sabina Olopade, a trained teacher who is the Managing Director in charge of sales, handling distributors around the country. In this chat with Financial Vanguard, the duo spoke on what motivated them to go into the business, the challenges and more. Excerpts:
•Pelletized aquatic feed
Motivation: Going into production: "We graduated to selling imported feed but when people started complaining that they were not making profit, we began producing pelletized feed. When the complaints of not making gains continued, we decided that we should buy the floating feed extruder. We took a bank loan to do that but the interest rate was so high that we were unable to meet demands and that loan nearly destroyed us. Thank God we got somebody that helped us at Stanbic IBTC with small loan for the installation of the machine and other things. At the end of the day, we had no money to buy raw materials for production," said Mrs Olopade. Added Engr. Olopade: "We felt that the raw materials are abundant in Nigeria so all we needed was the machine. So we bought the extruder machine and we have started production." Floating fish feed: "We are producing locally now instead of importing from US or Europe. All we need now is assistance in terms of funds to be able to buy enough raw materials. So far, so good," he said, adding: "We are doing all this so that we will have enough food in Nigeria and also create jobs. Many of our graduates are unemployed and agribusiness requires large number of workers – accountants, machine operators, loaders, extruder operators, distributors, etc. As at now, we run two shifts with about 100 workers and almost all of them are graduates." Challenges: Engr. Olopade said that apart from paucity of funds and high interest rate on bank loans, other challenges include dishonesty amongst staff and crisis in the north."Right now, we don’t
•Fish pond •Floating fish feed extruder for producing grains into highgrade aquatic feed pellets. have enough raw materials to produce because during the harvest period when the raw materials were relatively cheap, we needed a lot of money to buy in bulk and store but we could not do that so there is no way we can produce at a cheap rate. During the harvest, if you are able to get as much raw materials as possible and store, you can produce at a cheaper rate and sell at a cheaper rate too. On the other hand, if you are buying one or two trucks, there is no way you can produce at a cheap rate. That is why we need assistance from industrialists in form of funding so that we will be able to get the raw materials at very cheap rate." "We lack materials, the ones
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CCORDING to Engr. Rufus Olopade, a Mechanical Engineer, they got into fish feed business because of their love for country and people. “We realised that a nation that cannot feed itself is dead so, we went to the University of Ibadan to learn more about feed production business and how we can manage it properly because when you don’t have the knowledge, it will be very difficult to succeed. So we did agric management. We got into fish feed production in 1989. At inception, we were into local feeds but we discovered that Nigerians needed more, especially fish and poultry farmers so we decided it was better for us to go into floating feed production instead of importing because with importation and payment of duty, there is no much profit for the customers. "After production, there are distributors and marketers. We looked at that and concluded that it will help the nation instead of just thinking of profit alone, you think of others and that was the major reason we dabbled into the business." Said Mrs Olopade: "The business was named after me. We both agreed that the name should be Sabina Pad, ie Sabina Olopade. I am a trained teacher but I have special interest in agriculture so I started on a small scale and then I told my husband to join me when he retired. We started since 1994, selling agric raw materials and in 1999, we registered the company as Sabina Pad Enterprises Limited so we started selling all the raw materials and producing feed locally. "We do feed milling for people too. If anybody who wants to go into small farming comes to us with his formulation, we do the formulation for them."
who are already well established in the north. The only thing is that when you are supposed to have the raw materials in two days, it takes about three days so movement is slow; they are afraid and this has made the prices to go up. What we were buying at N90,000 per ton is now N150,000 per ton. As a result, we no longer make profit but because we still want to be in business, we have continued. "Last year, a female staff in a auditing department colluded with the salesgirl and they defrauded the company of about N11.5 million. For instance, when they collect N100, 000 from a customer, they enter N50,000 and enter the rest as pending so we did
We got a loan from the bank but the interest rate was so high that we were unable to meet our demands on the feed and that loan nearly destroyed us
we are using now were bought in the retail market; we could not buy in bulk due to paucity of funds. If we had enough money, we would go up north and purchase in bulk during harvest," added Mrs Olopade. Asked if the crisis in the north does not affect business, the Chairman said: "It is affecting business a little, not much because we have customers
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not notice on time until it was late. We invited the EFCC and in the end, they were asked to be paying N30,000 every month until they finish paying." Distribution: "We have our products in almost every part of the country and recently, we started producing dog feed with the extruder. We have
shops being managed by the Managing Director. She is in charge of marketing our products. We have trucks that do the supplies and some customers also bring their trucks to buy," he stated. Training: "I went to Georgia University in the US to acquire more knowledge in the field. Last year, I went abroad to learn more about the extruder so that when problems arise, we will be able to solve them. "We requested for experts from abroad and they came here to train our staff for a whole year. It is more expensive to send them abroad. So once in a year, I travel abroad to be trained in new technologies and then pass it on to the staff so if any of the machines breaks down now, our people will repair it." Division of labour: On whether they plan to have their own farm, the chairman said: “When you go abroad, you see that those who are in charge of farming are different from those who are producing. If you want to farm as well as produce, you may not be able to cope. We are trying to educate our people to embrace the principle of division of labour. If I am a producer, you supply me the raw materials like soybeans, maize, palm kernel cake etc. They create employment also and that is why we will not go into farming. But we do small fish farming to test our feed before pushing it into the market.”
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36 — Vanguard, MONDAY, SEPTEMBER 1, 2014
“Missing $49.8/20bn and missing organ in the Nigerian economy —1 “It is better sometimes not to follow great reformers of abuses beyond the threshold of their homes.” George Eliot, 1819-1880. (VANGUARD BOOK OF QUOTATIONS p 210. “As American as apple pie” is a common expression when referring to something uniquely American. “As Nigerian as jungle justice” would have to be one of the expressions which can be applied to us. The easiest way to get a man beaten to a stupor, or death, is for another man, in a crowded place, to raise alarm that his male organ had disappeared after the other man shook hands with him. Several men have suffered the fate of being descended upon by a mob, defined here as a monster without a brain — a critical organ to human beings. Unfortunately, mob jungle justice, in Nigeria, is not limited to physical violence. In these days of social media, it has taken a new dimension – making the atrocities of the past, by mobs, appear like innocent past times. Today, anybody, government or organisation, can find itself the victim of mob attack based on defamation – deliberate or inadvertent. What is even more disturbing is the fact that even when the facts are presented, the mob still refuses to apologise to the victim(s) or to turn its venom on the person(s) who misled them in the first instance. Nigerians are rapidly losing one vital organ, when discussing issues of national importance. It is not the male organ, whose “disappearance” had led to the lost of several lives. It is the brain – without which all other organs are absolutely useless. Let me quickly explain – with reference to a most vital national issue which should have been laid to rest, but, which is still being flogged by the mob. A long tern reader of my columns in Vanguard Newspapers called me, the day after the news broke that the former Governor of Central Bank, Sanusi Lamido, had made the allegation that the NNPC had failed to remit $49.8 billion to the Federation Account. He wanted me to make a comment. My reaction was simple. “I cannot comment on any unsubstantiated rumour or allegation.” The man was livid with rage – the normal reaction of those who believe in jungle justice – physical or verbal. As many of those who have not lost their own vital organ will recollect, the nation was startled when the LEADERSHIP NEWSPAPER, ON December 11, 2013 reported that $449.8b of crude oil lifted from January 2012 to July 2013, representing 76% was not remitted to the Federation Account. The report itself was based on a letter written by the former CBN Governor to President Jonathan, earlier on, which was leaked to the media for reasons not too difficult to understand – to generate mob reaction. “Are you going to hang him anyhow and try him afterward?” Mark Twain, 1835-1910. Mark Twain must have had
a people like those who populate the Nigerian media, print, electronic and social, in mind when he wrote that satire which a true reflection of the character of brainless mobs. Twenty four hours after the report was published, the media was awash with comments from those who, obviously, cannot, or refuse to differentiate fact from allegation or even rumour. For some reason, it never even occurred to them that the CBN Governor, another human being, could be wrong and might be raising a false alarm. Like the mob pummeling the man accused of making the male organ to disappear, they descended on government officials. The primary targets were the President, the Ministers of Petroleum Resources and Finance – none of whom is my favourite. But, irrespective of what one feels about any official, justice demands that the allegations made, against them, be evaluated on their merits and they, as the other parties be given a fair hearing. This, the mob was not prepared to do. On my part, the operating principle remains the same for “friend” or “foe” and they were enunciated by Malvin Kalb who wrote as follows. “A journalist should be pursuing a fair rendition of truth without regard to popular moods…” Journalism and the practice of it should never be a popular contest; otherwise the media people become partisan purveyors of falsehood – which is not in society’s interest; irrespective of any other interests they serve.
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he $49.8b story was a hoax from the start and that was the main, and, only reason, there was no comment on it from me till now. And, it was a terrible error for which the former Governor of Central Bank should be held primarily responsible and other commentators, who first believed the $49.8b story as accessories to the hysteria which followed on the media. Let me quickly point out the danger signals which individuals, whose brains were not missing, should have observed when the first story broke in December 2011. Even the village idiot now knows that Nigeria is heavily dependent on the revenue from crude oil. In fact, this nation is on a life line tagged CRUDE OIL REVENUE. Sever that life line for one month and the nation will experience high fever; for two months, and the nation is in comma. Thus when the report mentioned that the $49.8b represented 76% of the crude oil lifting for nineteen months, it was clear somebody or a lot of people had lost their brains when making that allegation. There is simply no way Nigeria would mot miss 76% of the revenue from its crude oil lifted in one month – let alone nineteen. From the outset, I knew that the former Governor of Central Bank had made a grievous and unpardonable mistake and had set in motion mob hysteria – which remains unabated till today; long after the $49.8b story had proved to be just that — a hoax. Visit: www.delesobowale.com or Visit: www.facebook.com/biolasobowale
Vanguard, MONDAY, SEPTEMBER 1, 2014 — 37
Econm By PETER EGWUATU
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ompliance risk has been identified as threat to stakeholders’ value in the Nigeria Banking sector. Mr. Ifie Sekibo, Managing Director of Heritage Bank, in a goodwill address to members of the Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN) at the August edition of their monthly meeting hosted by the bank in Lagos said that compliance function has been elevated to play a pivotal role in the sustenance of stakeholder value in the nation’s banking sector because compliance risk has become a core risk in banking business and every time a bank pays a penalty for compliance infraction and value is destroyed. According to him “The business, regulatory and legal landscape around the globe is increasing in complexity while the scrutiny by the banking public, law enforcement agents and regulatory bodies is intensifying. Meanwhile, Financial Institutions now have to grapple with the rising cost of compliance breaches and the underlying risk of reputation damage. Banks in particular also have to navigate the
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Compliance risk poses threat to stakeholder value in banking sector proliferation of new regulatory requirements and address stakeholder expectations”. Sekibo commended CCCOBIN’s past and ongoing efforts at ensuring a healthy banking sector in the country through its numerous interventions and tasked the body not to relent in getting the sector off to a healthier state. He said, “I congratulate you on the success of the 2014 Compliance Conference that Heritage Bank proudly co-
sponsored. I am also not unaware of the giant strides that CCCOBIN has made in assisting to get Nigeria off the Financial Action Task Force (FATF) Grey List, the introduction of Uniform Account Opening Forms in collaboration with the Central Bank of Nigeria and other contributions to policy development especially in the area of AML/CFT; but, there are operational issues that compliance officers need to
handle to get us to the promised land”. While identifying internal stakeholder knowledge gap as a great problem besetting the banking sector, the Heritage Bank helmsman called on Compliance practitioners in the sector to re-examine their relationship with other staff within their jurisdiction who view compliance professionals and their activities as a pain rather than a value enhancer.
Access Bank’s earnings growth to accelerate in second half
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ollowing Access Bank’s first half results 2014, FBN Capital has said “We continue to believe that the bank will expand its Return oon Earnings , ROE by over 400 basis points, bps to around 19.0 per cent in 2014. Management’s reiterated guidance of a 20 per cent ROE implies a slightly stronger outlook. Drivers behind the improved 2014 earnings outlook include
net interest margin expansion to close to 7% from around 6% in 2013, over 20 per cent loan growth in 2014 and doubledigit growth in non-interest income. Y/y improvements in 2015 earnings are unlikely to be as strong as 2014. Nonetheless, with the shares still trading on a 2014 E P/B multiple of 0.8x, we do not believe the market has fully priced in the improvements we are seeing. As we roll over our
valuation to 2015, we have increased our price target to N12.3 (N10.5 previously.). We retain our Outperform rating.” According to FBN report “First half 2014 results in line; doubledigit growth in underlying earnings: Access Bank’s first half 2014 net interest income and noninterest income grew strongly, by 16 per cent yearly and 45 per cent yearly to N24.4billion and N16.6billion respectively. As such profit before provisions increased 26 per cent yearly to N41billion.
Rencap maintains "BUY" rating for GTBank
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ne of the key drags on Guaranty Trust Bank Plc, GTBank’s half year 2014 results was a higher-thanexpected impairment charge for the quarter, as Renaissance Capital , Rencap maintains BUY rating for the bank. According to Rencap “Asset quality – impairments to be flat-to-lower. In an environment where delivering revenue growth was already operationally constrained, we believe a shock to the impairments line is the last thing investors would have wanted to see. The charge was largely driven by one asset – Lister Flour Mills. We understand management had observed signs of stress in the repayments and was contemplating classifying the loan as substandard. The loan has now been classified as doubtful and a 50 per cent provision taken, following the death of the promoter. An interim audit also triggered the front-loading of impairments. Management expects the impairment charge to flatten out over the second half 2014 or to be lower than in first half 2014, depending on its success with recoveries.
38 — Vanguard, MONDAY, SEPTEMBER 1, 2014
Interview
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How is your organisation structured to cope with the increasing global demands for ethical business practices? We have a Code of Business Conduct and Ethics which applies to everyone working for Diageo (our parent company) worldwide regardless of location, role or level of seniority. We expect those who work with us and for us to act in accordance with the principles of the Code and relevant policies and standards. The Code sets out our commitment to conducting business in accordance with our purpose and values, all relevant laws and regulations and industry standards. It provides guidance on what is expected of each stakeholder and references other policies and standards. Failure to comply with the Code, policies or standards is treated very seriously and may result in disciplinary action, up to and including dismissal. We have a fully resourced compliance and ethics office whose main responsibilities are the inculcating of our values, Code of Business Conduct and Global Policies in the organization. They have different strategies that they deploy to ensure that compliance and ethics remains in the front of mind of all employees, because as you may be aware a well-executed ethics and compliance program can eliminate a significant amount of improper behavior. We walk the talk in terms of our compliance programme. Within two months of joining the organization employees have a one on one formal compliance and ethics induction. As a stop gap between when they resume and when they have their induction, a
Facing the challenges of ethical business Practice in Nigeria — Seni Adetu mandatory onboarding is done within 7 days of resumption, which is followed by an online Code of Business Conduct training. The formal induction class is a reassurance that the new employees are on the same page with rest of the organization. The tone at the top is very vital in the effective compliance programme in any organisation; as such we have a line manager capability tool kit which invariably enhances our line managers to respond to the enquiries of their direct reports with agility. We also have an annual ethics and compliance programme tagged “Pathway of Pride” where we as a company dedicate a month to discuss issues bothering on compliance and ethics, including ethical dilemmas that we face every day in the performance/execution of our job roles and responsibilities. The 2014 edition was recently concluded in April 2014. We have 15 global policies which all Diageo companies are expected to comply with. Some of these policies include: Anti money Laundering Policy, Anticorruption Policy, Anti-discrimination & Human rights policy, Employee Alcohol Policy, Quality Policy, Environmental Health and Safety Policy etc. We also have an annual certification of compliance which is a platform on which employees are tested on their appreciation of our code of business conduct and our global polices. How do you influence your business partners and how do you ensure that they imbibe your values? We have a robust Know Your Customer and Know Your Business Partners Programme. Before we engage the services of any business partner it is mandatory to conduct comprehensive due diligence on them, in addition to this, each vendor has to provide comprehensive information about the company in the procurement Vendor Education Package, and a mandatory certification of compliance with our Code of Business Conduct and all applicable laws including the Foreign and Corrupt Practices Act (FCPA). We also periodically conduct trainings for our business partners on our Code of Business Conduct and other salient policies. Our business partners are aware that we have a zero tolerance to all forms of unethical behaviours/ activities in relation to our business. We are constantly reviewing our business relationships to be sure we are engaging in business relations with like-minded companies/individuals.
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ou recent won an award from the Institute of Risk Management. Why is winning this award important to you? Thank you and I have to say it is something we are very proud of. The truth is that, any organisation that wants to compete on the world’s stage must ensure that it has robust and effective risk and governance structures and for us being part of the wider global network that is Diageo and being listed on the US and UK exchanges means that we have to hold ourselves to those standards in addition to what might obtain locally. The impact of noncompliant behaviors or not having effective compliance structures in place can be disastrous for a company just like ours, with operations in about 180 countries. The recent high profile GSK bribery allegation is a life example on what noncompliance to internal policies as well as external regulations can do to a company ’s reputation. Other companies like Danone, HSBC, Barclays Bank, Tesco, etc, have also had their share of public and regulatory scrutiny on various issues bothering on good corporate governance, which has in one way or the other affected their corporate reputation. Reputation is key to the success of any business enterprise. Which is why at Guinness Nigeria Plc., we strive to demonstrate the highest standards of integrity in the way we behave towards each other and to those outside of the company. Our actions and interactions with our consumers, customers, employees, public officials, suppliers, shareholders and other stakeholders clearly reflect our commitment to doing the right thing. Reputation is critical to our commercial success and can only be enhanced by behaviors of which we can all be proud.
We share our Code and the accompanying policies with our stakeholders, and do not compromise on any of our values
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How do you intend to shape the ethical sphere in corporate Nigeria? We are a member of the executive core group of the Convention of Business Integrity (NGO), which is an NGO with the key objective to provide an alternative to the perceived allencompassing culture of corruption, showing that there are other ways of behaving / doing business in such a highly-corrupt environment. We were platinum sponsors of the First Christopher Kolade Lecture on Business Integrity, we are also on the board of the Anti-Counterfeit Collaboration (ACC )- Nigeria’s flagship anti-counterfeit group, to mention a few. We share our Code and the accompanying policies with our stakeholders, and do not compromise on any of our values. We continuously keep focused on the high expectations we have set and allow others to understand how we operate and how they can adopt, refine or build on our experience. Our expectations are high but with the right partners, we can
redefine the conventional. Together, we will drive systemic change. We have periodic trainings with our business partners where we explain our code and our salient policies, and the reasons why we cannot follow the “norm” in some instances. They are encouraged to cascade these values to their own business partners and employees as well. We endeavor to consistently walk the talk and live our values in spite of the challenges of doing business in our environment. Though, to be sincere, it can be tough at times, but we are relentless in our pursuit of conducting clean business in Nigeria. How can your ethical culture be a competitive advantage for businesses in Nigeria? Employees are more satisfied at companies with reputations for ethical business practices and good governance, and as such Guinness continues to be an employer of choice. Investors are better educated now, and are actively seeking for ethical companies where they can invest. By acting ethically, we have a greater opportunity to outperform our peers and win in the marketplace, whilst attracting technical partners who are seeking ethical businesses to align with. Building positive reputation is strategic to any corporate organisation; especially a global brand like Guinness, the success of any business pretty much depends on its public image, which also helps to build consumer loyalty. Finally, our ethical stance, and compliance structure will invariably build on our reputation and our global ambition to create the Best Performing, Most Trusted, and Respected Consumer Products Company in The World.
Vanguard, MONDAY, SEPTEMBER 1, 2014 — 39
40 — Vanguard, MONDAY, SEPTEMBER 1, 2014 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997
ealing with the excess liquidity c h a l l e n g e requires innovative approaches in view of the source of the problem. One potentially enduring solution, which would avoid the creation of new money and boost the naira value in the foreign exchange market, relates to the allocation of foreign exchange earned from oil to the three tiers of government rather than monetizing it. But this may be a recipe for capital flight. Therefore, the Central Bank would need to develop capacity for liquidity forecasting a n d programming.”Vision 20:2020 ‘Monetary Policy Thrust’ In reality, the success or failure of any economy is generally predicated on its monetary strategy; thus, abundant endowment of mineral and agricultural resources will not necessarily deliver inclusive economic growth, if the system is underpinned by monetary strategies that are out of step with best practice management. Consequently, the success of vision 20:2020 may well rest on the strength of its monetary policy thrust. The following is a simple English translation which should facilitate understanding of Vision 20:2020 monetary policy thrust. “We have failed over the years to combat the unusual problem of systemic surplus Naira which fuels inflation and instigates a weak Naira and very high cost of funds; furthermore, systemic Naira surplus, also sustains the anti-social and reckless strategy of placing government deposits at zero percent while government simultaneously, borrows
with double digit interest rates and crowd out the real sector from access to cheap loanable funds. “Thus, the failure of our economy is rooted in our reluctance to tackle the source of unyielding Naira surplus which results when CBN creates/prints fresh supply of Naira as substitute for distributable dollar revenue. Nonetheless, we recognise that if we muster courage to stop such monthly creation of New Naira supply, the Naira value would be boosted in the foreign exchange market”. “However, we recognise that if dollar revenue is allocated in its pristine form without substituting Naira, such an arrangement will stop the creation of disenabling surplus Naira, but may inadvertently facilitate stealing and speculative repatriation of Nigeria’s dollar reserves. Consequently, in order to avert such “illegal” forex outflow, we will continue to substitute fresh Naira supply, for dollar derived revenue!” However, “if substitution of New Naira supply is sustained, the CBN will need to develop the capacity to forecast and programme the extent of Naira surplus that is desirable in order to minimise an inflationary spiral!” The preceding is a simple translation of the Vision 20:2020 monetary policy thrust statement. Well, to the extent however, that six years after commencement of the Vision, inflation still remains untamed, and cost of funds to the real sector remains over 20 percent, while government continues to borrow money it intends to keep idle at over 10 percent, and the Naira exchange rate continues to depreciate inspite of increasingly buoyant reserves, we may confidently conclude that CBN’s strategy for liquidity forecasting and programming has failed.
Clearly, the Vision 20:2020 economic blueprint rejected the obvious solution of allocating dollar revenue in its original form because of the fear of unproductive unsubstantiated huge leakages from our reserves. In reality, in view of the abysmal level of greed, lack of patriotism, and ineffective sanctions for treasury looters, it is indeed likely, that raw dollar allocations may truly worsen the outflow of our export dollar revenue. Nonetheless, it is equally true that if dollar certificates rather than actual dollar cash served as instruments for allocations of dollar revenue, the threat of capital flight will
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Will dollar allocation induce capital flight?
The success or failure of any economy is generally predicated on its monetary strategy
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definitely be minimised. In the rest of this article, we shall examine whether the process of Naira substitution for dollar revenue as currently practised serves as better protection of the federations dollar reserves than an allocation process that adopts dollar certificates which can only be available as legal tender (for domestic spending) after the beneficiaries have exchanged their certificates for Naira sums at prevailing market exchange rates from commercial banks. Thus, under the current system, the CBN captures the dollars and creates new Naira supply as allocations,
while, the dollar values remain temporarily domiciled with CBN. The constitutional * beneficiaries lodge their huge Naira allocations in banks and thereby provide the banks with the leverage to instigate surplus Naira and expand their capacity to create credit and instigate inflation. * The CBN, with its monopolistic ‘good fortune’ as suppliers of over 80% of the dollar market, auctions only part of its dollar cache to banks and Bureau De Change; thus, with surplus Naira chasing relatively limited dollars, the Naira exchange rate weakens as banks and BDCs speculatively purchase dollars from CBN auctions. Ultimately, despite the anxiety on capital flight, CBN immediately transfers the dollars purchased directly into the custody of beneficiary banks and BDCs; consequently, the CBN’s dollar balances are reduced accordingly. * The banks and BDCs in turn add their margins, which may exceed the current N7/ dollars before selling to their customers, who may be importers or indeed government parastatals and ministries, who were the original owners from whom the auctioned dollars were initially captured. * The BDC allocations become the primary source of funding the nefarious activities of treasury looters, currency traffickers and smugglers despite the threat to Nigeria’s economic and industrial growth and security;
similarly, the banks can also roundtrip or speculatively hoard their dollar purchases and create disenabling market distortions. — Conversely, with dollar certificate for allocations, the CBN does not create new Naira supply, with the attendant destabilising economic consequences; furthermore, the dollar cash remain domiciled in the CBN instead of dispersal to banks and BDCs. — Government beneficiaries of dollar certificates approach banks to convert their dollars to Naira in a market where more dollars chase relatively static Naira balances, as no new supply is created by CBN; consequently, the Naira exchange rate becomes stronger while CBN’s dollar reserves still remain stable. —— The banks would domicile their dollar purchases in domiciliary accounts with CBN, thus preventing round tripping and such anti-social transfers. ——In case governments or its agencies require imports, they simply surrender their dollar certificates through banks to CBN so that their domiciliary accounts with CBN can be debited with the dollar value of their imports immediately at sight of documentary confirmation of satisfactory shipment of their orders. ——Private sector importers would buy dollars at open market exchange rates from banks to cover their invoice values. The banks would simply instruct CBN to pay the overseas suppliers of their (banks) customers from their domiciliary accounts with the CBN once the CBN receives documentary confirmation that shipment of imports has been satisfactorily effected. Save the Naira, Save Nigerians.
Business & Economy UBA, MasterCard partner to reward card holders
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asterCard holders are now having opportunity to get reward for using their cards to do shopping both local and international. This is a way of encouraging cashless society as initiated by the Central Bank of Nigeria, CBN. UBA in partnership with MasterCard has embarked on an initiative to reward MasterCard cardholders tagged Priceless Holiday. The objective is to encourage international spend during this summer season. UBA MasterCard is accepted in over 210 countries and at millions of terminals across the world. The reward scheme also encourages the use of the Card for local and domestic web and Point of Sales, POS payments. Under this arrangement, Cardholders who spend N50, 000 and above using their Card on the ATM abroad, or on the Web and POS in local and international outlets stand a chance to win shopping C M Y K
vouchers, there are 750 shopping vouchers to be given out. The grand reward is a breathtaking allexpense paid trip to Dubai which comprises the following- stay at underwater signature suite overlooking the Ambassador Lagoon Aquarium at Atlantis The Palm, helicopter tour of Dubai , guided tour of the world’s largest mall, luxury dinning at the world famous Nobu Restaurant, a visit to the top of Burj Khalifa. According to UBA’s Divisional Head of EBanking, Dr. Yinka Adedeji, the promo ends September 30, 2014. On Card segmentation, UBA has MasterCard cards for different segments. UBA Debit MasterCard is for all Cardholders and like other MasterCard products, is widely accepted at all MasterCard locations across the world.
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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Media/Marketing Capital Market E-Commerce Industry Micro Finance Graphics Department