Financial 02 December 2013

DECEMBER 2, 2013

Price of rice goes up, scarcity looms as poor quality floods market

By SUNNY IKHIOYA & GODWINE ORITSE

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rice of rice has hit the roof and low quality brand has flooded the market just as farmers have threatened to stop rice cultivation according to Tunji Owoeye, Chairman of RIMIDAN (Rice Millers Importers Association of Nigeria).

He said that farmers have threatened to stop production of rice as the Millers/ Processors are no longer buying from them. The Processors stopped buying because they could not compete with the smuggled imported rice. The price

109.8

2.2

2,793.00

+23.00

17.23

0.01

111.29

+0.43

93.70

+1.40

CURRENCY BUYING CENTRAL DOLLAR POUNDS EURO FRANC YEN CFA WAUA

154.72 252.7661 210.6358 171.1126 1.5123 0.3017 236.765 RENMINBI 25.3872 RIYA 41.2532 KRONA 28.2325 SDR 237.5261

155.22 253.5829 211.3165 171.6656 1.5172 0.3117 237.5302 25.4697 41.3865 28.3238 238.2937

of rice is soaring at a very alarming rate.

Presently, a good brand costs N13, 000 and above. The fear is that prices of rice will further go up as Christmas and New Year festivities approach. While smuggled imported rice cost about N10, 000 in the open market locally produced rice cost as much as N13, 000. The quality of the smuggled rice is of low grade.

According to Financial Vanguard market survey since the imported rice in the market do not go through official channels like the Customs and Standard

Organisation of Nigeria (SON), all imaginable types are now smuggled in.

It is a situation of “anything goes”that is available in the markets place now; most of them are re-bagged in Nigeria and of very low quality standards. A lady, Mrs. Toyin Adegbenro, who does her shopping at Agege market axis, complained that rice in the market has become tasteless, no matter how well the stew or soup is prepared. The fall out of current policy on rice policy therefore is an influx of sub standard rice into the Nigerian market and this

is very dangerous to the health and well being of the Nigerian consumers.

FG to rethink policy THERE is however strong indication that the Federal Government may have a rethink about the high tariff on rice.

This indication was given by the Chairman, Presidential Committee on Trade Malpractice, Alhaji Dahiru AdoKurawa, who said Government would soon review tariff on rice, to tackle

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SELLING 155.72 254.3998 211.9972 172.2185 1.522 0.3217 238.2953 25.5522 41.5198 28.415 239.0613

CBN Exchange rate as at 29/11/2013

From left: Arunma Oteh, DG SEC, Bala Mohammed, FCT Minister, Suleyman Ndanusa, Chairman SEC and Leonardo Gomes Pereira, DG SEC Brazil during the 3rd annual Capital Market Retreat, theme “Actualising Nigeria’s Economic Potential” Abuja.

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18 — Vanguard, MONDAY, DECEMBER 2, 2013

Cover Story

The Entrepreneurial Revolution: A New Order for Nigeria PT 2

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ignificant lessons could also be learnt from Margaret Thatcher ’s economic policies that propelled Britain to an economic boom in the ‘80s through extensive promotion of entrepreneurial initiative and share-ownership.

Thatcherism’s thrust on substituting debt with equity spawned colossal economic development in the UK, which was soon adapted and replicated across Southeast Asia.

In the 20th century the USA traded their entrepreneurial From left: Okoghenun Paul, MD Rahony Nigeria Limited; Oluwasusi Olagoke Familoni, Corps Commander (CC) CTSO; Abdul Bamgbopa, CEO, SATTRAK Services Limited; and Nimota Oritsesemaye Okoro, Representative of Zonal Commanding Officer, Zone RS 2 Command HQ Federal Road Safety Commission at the FRSC Stakeholders Forum held in Lagos.

Price of rice goes up, scarcity looms as poor quality floods market smuggling and revenue loss.

Ado-Kurawa said in Lagos that the planned downward review was aimed at reducing the level of smuggling of the commodity from Benin Republic. He observed that the Federal Government introduced the rice policy of 110 per cent duty and levy in January, to boost local rice production.

“The Federal Government will likely adjust the policy because it has escalated the influx of smuggled rice from neighbouring countries. Benin Republic is one of the highest importers of parboiled rice, the country that ordinarily imports about 230,000 tonnes per annum now imports about 2 million tonnes. The twomillion-tonne parboiled rice imported by Benin is all smuggled into Nigeria,” the chairman said.

He recalled that the stakeholders met recently in Abuja and advised the Federal Government to review the rice policy and sift out the grey areas. This, he said, was to ensure that the government’s quest to halt rice import was achieved.

Ado-Kurawa lamented that Nigeria lost over N2 billion to smugglers through land borders.

According to him, Nigeria that used to be the highest rice importer, had suddenly relinquished the position to Benin Republic.

Rice farmers say smuggling will hinder success of rice importation policy

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eanwhile Chairman, Rice Farmers Association of Nigeria (RIFAN), South-West zone, Mr C M Y K

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Continues from page 17

He identified smuggling as the major factor that would hinder any ban on the imported commodity, just as it had adverse effect on local rice production

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Olusegun Atho, has said that unless smuggling is tackled, the current policy on imported rice will yield no result. He identified smuggling as the major factor that would hinder any ban on the imported commodity, just as it had adverse effect on local rice production.

According to him, “Government needs to come out and deal with the issue of smuggling, in order to encourage local growers.’’

The RIFAN chairman also advised the government to provide adequate funding by way of grants or loans to farmers. “These factors are very important and must be put into consideration, before the proposed ban. If these things are not in place, the ban cannot be realistic. Until when government begins to do something about it, that is when we can see the seriousness.”

Atho also appealed to government to construct more dams and provide minipumping machines for farmers to prepare them for irrigation farming as well as introduce

modern rice production technology. “If government can provide all these to farmers, that is when government can boast of selfsustainability.”

Local rice farmers to be given incentive Meanwhile, the Federal Ministry of Agriculture and Rural Development also said that local rice farmers would be given incentives for increased rice production.

Dr Kayode Oyeleye, a Special Assistant to the Minister; Dr Akinwumi Adesina, said that the gesture was to make the price of locally produced rice competitive to the imported variety. Oyeleye said that the tariff on imported rice remained high because the Federal Government was encouraging the consumption of locally produced one.

The special assistant also said that this would also strengthen the economy of the country as importation of rice would reduce.

Nigerians applaud policy but Much as Nigerians applaud the efforts of the Minister and other Officials of the agric ministry, in their attempt to boost and encourage local production; they deplore the hasty introduction of the high import tariff when a thorough analysis of the situation on ground has not been done.

They argued that it is dangerous to play politics or score cheap political points with issues that affect the

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revolution which they enjoyed in the previous 200 years and began a 50 years stint of dependence on the modern day corporation. The myth of job security prevailed in the past 50 years. This is now gone. Renowned historians like Will Durant wrote about this in 1944.Leaders like Mahatma Gandhi, Franklin Roosevelt and Stephen Covey had also written and spoken about it.

For sure, Africa represents uniquely different realities and challenges, and there is no effective model than can be entirely transplanted here. Policy makers must prioritise institutional efforts to compensate for reigning socio-economic realities. Nigerian initiatives to pursue financial restructuring, for instance, have been largely hamstrung due to civil and political unrest. Likewise, Abuja’s insistence on microenterprises, instead of small-scale ventures, has done little to help its burgeoning urban unemployed work force.

A viable economic agenda for Nigeria that allows rapid entrepreneurial progress has to focus on fundamental adjustments: •Creating a pro-active socio-economic environment that encourages creative and viable entrepreneurship from the grassroots level up. Indentifying and correcting infrastructure deficits and systemic imbalance inimical to small business.

•Developing a credit regime – through relevant financial and industrial policy changes – that is sympathetic to small business realities. Promotion of lending through equity, and not debt, is of critical importance.

•Removing administrative and trade barriers while simultaneously enhancing technical support and capacity building assistance for both existing and emerging entrepreneurs.

•Mobilising the country’s significant human resources pool by revamping the education sector to provide vocational, administrative and skill development training to rural and urban youths.

•Creating efficient and effective mechanisms for regulation and oversight of enterprise-development initiatives in general, and microfinance institutions in particular.

•Maintaining political stability and authority of democratic institutions; fighting corruption and building social consensus on important issues to ensure broad-based success of macroeconomic policies.

Another important consideration to this discourse is the difference between policy and implementation, which can at least partly be viewed as the difference between developed and developing nations worldwide. The best policies come to naught unless adequately executed, and the African continent provides a long list of such examples. Obasanjo’s edict on entrepreneurial studies could very well end up being the next one unless successive governments follow it through in both letter and spirit.

To accomplish durable prosperity, Nigeria needs to exploit its tremendous economic potential with innovative governance, together with an ironclad shift against endemic corruption. Interventionist policies and institutional mismanagement are potentially far more damaging in the long-term than, for example, the current economic crisis. A twofold agenda of reform and regulation, with effective implementation, is crucial to achieving the entrepreneurial revolution that will help the Nigerian economy overcome its trouble legacy.

The world looks with envy at the unprecedented growth of China and India.

These two Asian giants were still in the landscape of preindustrial agricultural economy when Nigeria was already setting up factories. Today they are enjoying the blessing of a borderless interconnected world economic order.

Nigeria needs to follow through on its significant economic potential with sincere governance and effective planning, together with an ironclad shift against endemic corruption.

Interventionist policies and institutional mismanagement are potentially far more damaging in the long-term than, for example, the current economic crisis.

Vanguard, MONDAY, DECEMBER 2, 2013 — 19

As it is the practice in Vanguard that a newspaper is a market place of ideas, we give readers opportunity to express their views on issues raised in the paper. Here is one of such views by a reader in London.

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here have been talks of Africa’s financial integration for more than two decades, but there aren’t any concerted, credible and encouraging signs that Africa is nearing its goals and objective of financial integration apart from a few disjointed accounts from various analysts’ opinions on Africa’s regional financial integration achievements.

Analysts have argued that African regional economic communities (REC), recognising the need for pooling of financial resources began establishing subregional capital markets in an attempt to solve the problem of their fragmented capital markets. Realising the fact that there is a strong relationship between developed financial markets and economic growth, African regional economic communities (REC) saw the need to integrate and consolidate financial markets as a vehicle for promoting economic development on the continent. REC also believed that financial integration would enhance, promote efficiency and productivity and facilitate the flow of information. Indeed, regional financial integration is seen as the only platform for establishing stronger links with financial systems and capital markets in more developed countries and economies.

But, has REC been able to establish this stronger links or has it the capacity to establish this stronger links with financial systems and capital markets in more developed countries?

Kuper, S. (2013) argued that since 2000, Africa has been

Why Africa’s financial integration is difficult going off in different directions. President Jacob Zuma, the South African president, in a speech while speaking on issues of toll roads recently lends credence to Kuper’s claim, and it is one of the reasons why Africa’s financial integration has proved difficult. “We can’t think like Africans generally, we are in Johannesburg. This is Johannesburg. It is not some national road in Malawi”. If indeed, the belief of REC is to enhance, promote efficiency and productivity within regional communities, I do not see how Zuma’s statement meets this objective.

Ironically, South Africa and Malawi are both members of the same African regional economic community called Southern African Development Community (SADC) where South Africa dominates the region economically, accounting for 60% of SADC’s total revenue and about 70% of SADC’s GDP. Evidently, South Africa has a critical role to play in the regional financial integration of that region. Therefore, such careless utterances of a high political figure like the president of South Africa which ridicules the economic and social development of a member country will not promote the desired cooperation that encourages positive and strong financial integration of that region and Africa as a whole.

Analysts believes that

financial integration involves a process whereby a country’s markets become linked or integrated with those of other countries or the rest of the world. Therefore, in a fully integrated market, all forms of barriers are eliminated to enable foreign financial institutions to participate in domestic markets. This is why it is argued here that careless statements like that of President Zuma should not be tolerated.

It hampers development of the SADC region and Africa by extension. Zuma should understand that whether a country, region or continent

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By TONY NAVAH OKONMAH

our African leaders demonstrate that Africa as a whole is their place and show love and respect for one another. Whether you are from Malawi or Nigeria or Ghana or Somalia or Cameroon or Senegal or Gabon or Kenya, we must look out for the things that promote the interest and common good of one another. Our leaders must stop playing this superiority and inferiority game that divides the continent and by extension transcends down to the various nationals of the various countries. Africans must learn to leverage one another.

We can’t think like Africans generally, we are in Johannesburg, this is Johannesburg, it is not some national road in Malawi

“chooses to integrate its financial markets formally or informally, it needs to create an enabling environment that would attract foreign participation” and his statement on Malawi’s development processes doesn’t create an enabling environment for the financial integration of the SADC and Africa as a continent. It is time

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We have seen that why regional economic communities have not been able to harmonise the standards and regulations of governing financial markets and to create a larger central African financial market known as African Economic Community (AEC) that would support Africa’s regional integration agenda is due to

such antecedents behaviours like the one exhibited by Jacob Zuma, the South African President. Indeed, smaller African countries cannot achieve such economic impact by themselves unless they are linked up through the financial markets of the regional economic markets.

Malawi should be encouraged to develop further its infrastructure within the SADC region and not ridiculed.

Zuma should focus more on the three benefits of financial integration which are the primary aim of the REC financial integration agenda.

These three benefits are (1) Risk sharing – South Africa should share its risk of expertise and know-how with Malawi that would boost specialisation in production.

(2) Improved capital allocation – South Africa should encourage better allocation of capital and support the smaller and poorer countries within its region to remove impediments to trading of financial assets and flow of capital. (3) Economic growth – South Africa’s deeper financial integration can encourage and stimulate stronger economic growth for its region by making financial resources available for economic activities for smaller member countries like Malawi. Germany did this for participating EU member countries like Greece, Spain and Italy during the recent financial crisis that engulfed the EU. Tony Navah Okonmah, a financial and economic analyst, wrote from London .

Business & Economy Continues from page 18 Price of rice goes up, scarcity looms as poor masses directly. impact on rice importation, the quoted as local production/ It will be recalled that quality floods market quantity produced is not importation and the reality on Vanguard on October 7, 2013 did a report on the situation of rice business in Nigeria. The report highlighted the fact that importers have stopped bringing in rice through the Nigerian sea ports because of the high import tariff regime and that all brands of rice in the Nigerian market are smuggled in through the Nigeria - Benin land borders, even though import through the land route is officially prohibited. The report also predicted that the situation will result in scarcity of rice during the “Ember months” as smugglers and local producers will not be able to cope with demand since rice

has become Nigeria’s most staple food.

The local production that the tariff was meant to protect is also affected by the smugglers activities. The gainers are the smugglers and the Customs officials who will have to be settled at the various border points If the current tariff is to work, the Customs Department must put a stop to the activities of smugglers. This appears to be a Herculean task for them to perform. If the customs are unable to perform, the land border should be open to all so that the government can earn

duties, instead of allowing a few unscrupulous elements to make a gain from the situation.

In the interim, stakeholders say that government can reverse the import tariff back to its previous position, so that importers can start bringing in rice. This will discourage the activities of the smugglers as it will not be profitable for them to bring in rice through Benin, as the tariffs will now be almost at par with what obtains at the ports.

Way forward At present local production is not strong enough to have any

significant in percentage terms.

Mr. Tunji Owoeye, suggested that the government should form a body of key stake holders he termed” Chain Drivers.”

They are to work together with key government departments to set a realistic time table for local production. There should be a monitoring team to determine the true position of local production and the actual quantity of local rice that is going into the markets. When Vanguard visited the markets in October, it did not find any local brand of rice on display for sale.

It is clear that there is a great disparity between what is being

ground. Right now, the market is in crisis; how does the common man get rice to eat this December? The government should immediately set machinery in motion to facilitate urgent importation at an encouraging tariff rate to importers. This will serve as an ad-hoc measure for sufficient rice to be available in the market during the season. After the season, the Minister can assemble a committee of all stakeholders in the rice business to fashion out a way forward.

See page 28 C M Y K

20 — Vanguard, MONDAY, DECEMBER 2, 2013

Business & Economy BRIEFS

World Bank pledges $500m support for FG’s agric. programme

AfDB programme empowers 33,000 groups in five states — Coordinator

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he Community-Based Agricultural and Rural D e v e l o p m e n t Programme (CBARDP) has said that it had empowered 33,000 rural women and other vulnerable groups in five states. Alhaji Ibrahim Arabi, the Project Coordinator, made this known in an interview with the News Agency of Nigeria (NAN) in Bauchi.

Arabi said that the groups were trained in various skills to better their living conditions.

He explained that the project was supported by the African Development Bank (AfDB).

According to him, the skill acquisition training is aimed at reducing poverty in the rural areas of the participating states of Adamawa, Bauchi, Gombe, Kaduna and Kwara.

Arabi explained that the beneficiaries had been trained in various skills acquisition programmes from the inception of the programme in 2006 to date.

“The beneficiaries were

FG approves N10bn for Conditional Cash Transf er scheme ansfer

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he Federal Government has approved N10 billion to improve the services of the Conditional Cash Transfer (CCT) scheme. This is contained in a statement issued by Mr Desmond Utomwen, the Media and Communication Consultant to the Millennium Development Goals (MDGs) Office in Abuja.

The statement quoted Dr Precious Gbeneol, the Special Assistant to the President on (MDGs), as explaining that the fund was to improve women and children heath care delivery system. It added that the CCT was designed to stimulate demand for healthcare by women and children.

According to the statement, the scheme is being scaled up to 30 states with total budgetary provision of N20 billion this year. “Efforts are being made by initiating Conditional Grants Scheme (CGS) as well as the deployment of groundbreaking mobile money technology to drive the new scale up of CCT. C M Y K

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From left :Chairman, Ikoyi/Obalende Local Council Development Authority (LCDA) Adewale Adeniji; Executive Director, Risk Management, Fidelity Bank Plc, Onome Olaolu and General Manager, Public Sector, Lagos and South West Bank, Tobi Lawal, duringthe official handover ceremony of the Classroom Block (Catering and Tailoring Sections) of the Lagos State School for Vocational Studies, Keffi Street. Ikoyi that was renovated and equipped under the Fidelity Helping Hands Programme (FHHP) of the bank , recently.

12% MPR unaffordable to borrowers —NACCIMA

BY NAOMI UZOR

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he Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has expressed concern over continued retention of Monetary Policy Rate (MPR) at 12 percent for more than a year by the Central bank of Nigeria, CBN, saying that it is unaffordable to borrowers.

Speaking on the state of the nation, the National President of NACCIMA, Alhaji Mohammed Badaru Abubakar, said that NACCIMA commended the Central Bank of Nigeria and its Monetary Policy Committee (MPC) for doing a good job to maintain monetary stability in the economy.

He stated that NACCIMA, however, expressed concern over the continued retention of its high Monetary Policy Rate (MPR) at 12 percent for more than a year now.

This, he said has kept the interest rate high and unaffordable to borrowers.

He said business operators should not be allowed to continue to struggle with that kind of lending rate if they are to thrive and boost productive capacities and create more jobs in the country.

“We express concern on the recent CBN policy pronouncement, which

drastically increased the CRR on public sector deposits from 12 percent to 50 percent and already threatening stability in the financial system as cost of doing business is escalating with lending rates also soaring since there will be less money to lend to businesses. We therefore, counsel that the CBN should review the CRR on public sector deposits downward to say 20 percent or 25 percent, so as to reduce the shock on the financial system and avert another round of distress in the banking sector” he stated.

Abubakar noted that the business community has

continued to be confronted with numerous taxes and levies being demanded by the three tiers of government, thus creating untold burden and distractions for business operators.

“We cannot continue to ignore the serious negative impact of multiplicity of taxes and levies on businesses, hence, counsel that the three tiers of government should continue to intensify efforts on harmonization of taxes & levies throughout the country to effectively address this problem,” he said.

he World Bank said it would commit 500 million dollars to s u p p o r t t h e Agricultural Transformation Agenda of the Federal Government.

The bank’s Fadama Task Team Leader, Dr Abimbola Adubi, said this in Lokoja during a visit to Kogi’s Deputy Governor, Mr Yomi Awoniyi.

Adubi said the money would be spent on the provision of agriculture infrastructure, staple crops processing and supply of improved seeds and seedlings to farmers across the country. He said that the global bank will spend additional 200 million dollars on the production of cassava, rice and horticultural crops.

Adubi said that the World Bank decided to lend a hand of support to the transformation programme after a thorough assessment by a team of experts. He said that the programme was capable of creating millions of jobs and the reduce poverty level among Nigerians.

The official however, said that Kogi State was the only state to benefit from the bank’s cassava production support plan.

Adubi said the state being the c o u n t ry ’s largest producer of the crop.

He said that the team was

Operators are flouting porting rules, says NCC

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he Executive ViceChairman of the Nigerian Communications Commission (NCC), Dr Eugene Juwah, has cautioned telecom operators against flouting Mobile Number Portability (MNP) rules.

Juwah gave the warning in Lagos at a Telecom Executives and Regulator ’s Forum organised by the Association of Telecommunications Companies of Nigeria (ATCON).

He said that some operators had deliberately refused their customers the choice of migrating to other networks, contrary to the business rule.

He said that much time, efforts and energy were spent to put the MNP rules in place, urging telecom service

providers to obey them. ‘’Very soon, the regulator will come up with its regulatory intervention by sanctioning the operators,’’ he warned.

Juwah said that subscribers demanded for MNP and, therefore, should be allowed to port at will.

He added that it would be wrong to conclude that MNP had not succeeded since some subscribers had more than one Subscriber Identification Module (SIM) card. Earlier, the Director of Customer Care, Globacom Nigeria, Ms Maria Svensson, noted that the MNP exercise had not affected the Nigerian telecom industry because most subscribers had up to three SIM cards.

Svensson said that at

present, more than 50,000 telecom service users had ported to Globacom. She said that one of the challenges of MNP was that of allowing a post-paid customer to leave a network while still owing.

Mr Ibrahim Dikko, the Director of Legal and Regulatory Affairs, Etisalat Nigeria, said that MNP had given subscribers choices and empowered them to make decisions.

Dikko said that MNP had fostered innovation in the industry as each operator tried to make its services exceptional. He, however, said that more awareness should created to ensure the success of MNP. The Executive Director of

Vanguard, MONDAY, DECEMBER 2, 2013 — 21

Business & Economy

LASG woos investors for PPP, promises conducive operating environment

By NKIRUKA NNOROM

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he Lagos State government has called on investors interested in public-private partnership to consider the state for such initiative, as they are assured of a conducive investment climate that will deliver competitive return on their investments.

The state’s Commissioner for Finance, Mr. Ayodele Gbeleyi, gave the assurance at a forum in Lagos.

Gbeleyi, who spoke on

behalf of the state governor, Raji Babatunde Fashola, assured that the state government would continue to strengthen its institutional framework to provide better coordination and planning of infrastructure, greater accountability for public investment and delivery of public services, as well as transparency in regulation and procurement.

He explained that the Office of PPP, an organ of the state executive, has been the driver of the PPP policy and

is responsible for its development and refinement over time, saying, “As individual processes develop and move further into the implementation stage, the office ensures effective stakeholder engagement, market interest and momentum to reach financial close and the start of construction and/or operation.”

“The office has also continued to support ministries, departments and agencies to ensure that their

From left: Head, Lisbulk Nigeria Ltd, Mr. Ganiyu Owolawi; Managing Director, Osun State Investment Company, Mr Bola Oyebamiji; Regional Sales Manager, Nestle Nigeria Ltd, Mr Adewunmi Adejumo and Field Manager, Nestle Nigeria Ltd, Mr Oluseye Agboola, during the presentation of a Pick- Up van to Osun State Investment Company as the 2013 Most Outstanding Distributor in Oshogbo, Osun State, recently.

LCCI decries unbridled importation of consumer goods

BY NAOMI UZOR

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he Lagos Chamber of Commerce and Industry, LCCI, has appealed to relevant authorities in the country concerned with importation of consumer products to check unbridled importation of the goods into the country as the manufacturing enterprises are still grappling with the inherent problems.

Speaking on the economy, President of LCCI, Mr. Goodie Ibru, said that Nigerian manufacturers are still struggling with the problem of unbridled importation of consumer products into the country, and that, generally, these products are cheaper and sometimes sub-standard.

“This has been creating sustainability challenges for manufacturing enterprises in

the economy. We once again appeal to the authorities concerned to address this concern in order to create room for the survival of domestic industries. Similarly, livestock farmers are full of lamentation over the brazen and overwhelming presence of smuggled poultry products from the neighbouring countries. These imported poultry products have a market share of more than 70 percent. All these create problems for the domestic producers and limit their capacity to create jobs” he said.

He lamented the high unemployment rate in Nigeria, saying that it is currently one of the highest in the world, at 24 percent.

“The rate of unemployment in the Nigerian economy is currently one of the highest in the world, at 24 percent.

Over 50 percent of the youths in the urban areas are unemployed. It is a very disheartening situation for parents who had laboured and strained to invest in the education of these youths.

The state of affairs has assumed the dimension of an economic and social crisis.

There is a relationship between rising criminality and unemployment,” he said.

Ibru said there is need to do something urgently to create jobs, and that the chamber proposes that there should be increased support for SMEs and business start-up through capacity building and funding, encouragement of domestication of private and public sector spending in order to boost the multiplier effect of domestic spending on the economy, promotion of sectoral linkages in the economy so that all sectors

PPP projects are carefully appraised, scoped and planned prior to initiating a procurement process,” he added.

He further stated that the state government is ready to support interested parties with incentives, adding, however, that the nature of the project determines the kind of inventive applicable to it, as incentives differ from one project to another.

Speaking on the theme of the event, “Public Private Partnership Innovations in Public Sector Financing”, Gbeleyi said it was instructive due to the dwindling national resources and the increasing socio-economic needs and infrastructural challenges of Nigeria.

“The situation is even more critical in Lagos State, the economic hub and commercial nerve center of the country, which houses about 2,000industrial complexes, 10,000 commercial ventures, 22 industrial estates, as well as seaport and airports,” he said.

He stated all these contribute to attract influx of people into the state, saying that it puts pressure on infrastructure needs of the state.

“In view of this, PublicPrivate Partnership come as a welcome strategy for the state government to bridge its huge infrastructure deficit, because PPP allows us to tap into private sector capital and leverage on its managerial efficiency, technology, innovation, entrepreneurial approach and expertise,” he stated.

Speaking, Ms. Ngozi Edozien, Director, Diamond Bank, said that banks have been critical to the role of infrastructure development all over the world, adding that without engaging with banks, both states and federal governments which are stakeholders in infrastructure development, will not move quickly in terms of infrastructure development.

“Banks have been at the forefront of nation building because that is what we are doing in supporting public infrastructure development through public and private partnership project financing. We have always been significant in the growth of the economy and in Nigeria.

BRIEFS Europe bans South African citrus im por ts impor ports over disease fears

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he EU has banned most imports of South African citrus for the remainder of this year over fears that a fungal disease found in dozens of shipments could spread to the 28-nation bloc.

The ban follows the interception of 36 citrus consignments this year from the EU chief ’s summer supplier that were contaminated with the fungal black spot disease, which is not currently found in Europe.

Earlier this month, Reuters reported that the European Commission was set to propose the ban, following pressure from citrus growers in southern Europe.

“The introduction of citrus black spot into the EU territory will pose a serious threat to the EU citrusproducing areas.

“For that reason, it is necessary to further restrict the import of citrus fruit from South Africa,” the Commission said in a statement confirming the move.

The ban will apply to all South African citrus shipments from regions where the disease is present, which covers the bulk of the country’s production.

Initially, the ban will apply only to the 2012 to 2013 harvest, which ended in October.

FG pledges transparency in marginal oil fields licensing

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he Federal Government has pledged to ensure transparency in the second oil marginal fields licensing for the upstream sector of the oil and gas industry. The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, made the pledge on Thursday in Abuja at the inauguration of the second oil marginal fields licensing.

“Today, we are here to flag off the second marginal field licensing round, “Over the next two weeks, the Department of Petroleum Resources will undertake a road show to different parts of the country about the programme. “This will be followed by three and half months of competitive bidding process, in line with the Federal Government’s commitment to openness and transparency in the conduct of business activities in the country,” she said.

22 — Vanguard, MONDAY, DECEMBER 2, 2013

Banking & Finance BRIEF Bloomber Bloombergg T V Africa launches business programmes on DStv

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loomberg TV Africa, a partnership between Bloomberg Television, a leading supplier of global business and financial news video content and Optima Media Group (OMG), a Lagos-based media company, has launched two new business programmes and also announced the launch of a further two programmes which will air from early 2014 on Bloomberg Television on DStv channel 411.

Africa Business Weekly reviews the most important business, economic and political stories and their impact across the continent.

Presented by Boason Omofaye and Uche Okoronkwo from Lagos and London and Eleni Giokos from Johannesburg, they are joined by leading experts to analyse the markets, debate the African agenda and discuss key investments, governance and economic commitments.

Engage professionals to avoid building collapse-NIA

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igerians should engage professionals in design and execution of building projects so as to avoid the recurring problem of building collapse.

The Rivers State Chairman of Nigerian Institute of Architects (NIA), Arc. Emmanuel Dike made this call in Port Harcourt during the inauguration of the Port Harcourt Office of Rifeng Piping Systems also, adding that the company’s pipes are the solutions to the plumbing challenges Nigerians are facing.

The Rivers NIA Boss also urged Nigerians to allow professionals to handle their buildings by first of all letting an architect design the structures to avoid their collapse.”

Dike also said that “We architects believe that rifeng pipes protects building because the pipe does not leak or not rust.”

He further called on Rifeng Piping Systems to sponsor training programmes for plumbers noting that “by the time you train plumbers, they will be the ones to market the rifeng pipes.”

By BABAJIDE KOMOLAFE

B

anks have commenced moves to protect their customers from the rising wave of electronic fraudsters by fortifying their internet platforms with additional security features.

In recent times efraudsters have been bombarding bank customers with scam mails with a view to deceptively acquire their personal identification number (PIN). The impact of these mails is reflected in report of the Anti fraud Portal of the Nigeria Interbank Settlement System (NIBSS) which revealed that Web and ATM Fraud represent the highest fraud occurrence during the periods under review.

Vanguard investigation revealed that for the period September 13 to October 13, the number of reported cases of fraud declined from about 140 to 110. During the period, Web fraud accounted for about 40, while ATM fraud accounted for about 20. E-commerce and internet banking fraud accounted for about 20 together.

In an apparent move to protect their internet banking platforms and customers from electronic fraudsters, two of the biggest banks in Nigeria, FirstBank and Guaranty Trust Bank, last week upgraded their internet banking platforms, fortified with additional security features.

Announcing the upgrade of its First Online internet platform, FirstBank said, “The upgraded platform now comes with enhanced security features, with multiple level security authentications such as two page login, personalized true stamp page, intelligent question and token authentication to protect customers from online fraudsters.

According to the Head, Marketing and Corporate Communications, Mrs. Folake Ani-Mumuney,’ the new FirstBank online banking platform, FirstOnline offers among others unique security interface that enables user to create a true stamp page identity which is exclusive to the customer ’s login page and ensures that customers are only guided to the authentic personal login page for their

From left: Mr Yemi Adeola,Managing Director/Chief Executive Officer Sterling Bank Plc And Mallam Sanusi Lamido Sanusi,Central Bank Of Nigeria Governor and Dr Suleiman Adegunwa Chairman Sterling Bank Plc .At the Launch Of Financial Inclusion Scheme By Sterling Bank Plc Held at Asejere Market Makoko Yaba Lagos. PHOTO- AKEEM SALAU

Banks move to checkmate activities of e - fraudsters •Fortify security on internet platforms

transactions with unique token pin as final transaction authentication.

Similarly, GTBank said its upgraded Internet Banking platform, “also offers customers an account information reporting service via its new homepage dashboard as well as an

enhanced security feature with its improved login keypad functionality ”.

Speaking on the development, Sina Ayegbusi, Head of Guaranty Trust Bank plc’s Technology Division stated that the Bank’s commitment to superior customer service experience

drives it to ensure that it utilizes revolutionary technology to simplify and secure the online banking transaction and experience of its customers. He further stated: “The upgrade to our Internet Banking platform gives our diverse costumers various on-the-go banking options due to its responsive design that makes it convenient for use on computer and mobile devices”.

CeBIH pledges support for CBN’s financial inclusion efforts

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ommittee of EBanking Industry Heads (CeBIH) has pledged its support for the financial inclusion efforts of the Central Bank of Nigeria (CBN).

CeBIH Chairman, Mr. Chuks Iku made this pledge at the 3 rd annual conference of the Committee in Uyo, Akwa Ibom State.

Chuks said the purpose of the conference among other things, was for e-payment stakeholders to learn new methods and strategies of pursuing the objectives of Nigerian National Financial Inclusion (NFIS), which is to reduce the number of adults excluded from access to financial services from 46.3 per cent to 20 per cent.

The objectives of CeBIH, he said, is to promote

electronic banking and electronic payment services in line with global best practices while promoting the adoption and usage of electronic channels in a way that will bring about financial inclusion of the unbanked and under-banked in line with the payment vision 2020.

He said the theme of the conference, Epayment Systems: Harnessing opportunities for growth and profitability, was informed by the need for banks and other stakeholders to seek for ways to grow the use of electronic channels in a sustainable way.

CeBIH, he said, “ recognises the role of Central Bank of Nigeria as our regulator and also that of NIBSS. What we want is that the CBN should engage stakeholders on a more

regular basis on its financial inclusion initiatives.

Commenting on the theme of the conference, Christabel Onyejekwe, Executive Director, Nigeria Inter-Bank Settlement System Plc, noted while there are opportunities for growth and profitability in the epayment industr y, increased collaboration is required to harness these opportunities. She said, “In the financial sector we have not rested on our oars, we have always risen to the challenge of harnessing growth and opportunities, even when it seems impossible. As an industry we dare to say we have contributed to building the nation, and we would continue to be a critical contributor to the GDP going forward.

Vanguard, MONDAY, DECEMBER 2, 2013 — 23

24 — Vanguard, MONDAY, DECEMBER 2, 2013

Corporate Finance BRIEFS

Dangote records highest dividend growth in capital market

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he Dangote brand has been declared as the company with the highest dividend growth in the Nigerian capital market.

The company also won the highest profit margin ratio award in the recent Pearl Award for Market Excellence Category for companies quoted on the stock market.

Aside emerging as the “Pearl of the Nigerian Stock Exchange”, the company also won awards in three other categories, in the 2013 edition. Leading the pack of other brands, Dangote Cement was adjudged by the board of governors of the Pearl Award Nigeria as the winner in the Industrial goods, Sectorial Leadership award and Building Materials category.

The President of the Pearl award Board of Governors, Tayo Orekoya lauded the Management of Dangote Cement for awards won and enjoined the company to keep the company’s flag flying.

“We are very proud to be associated with Dangote Cement and with Dangote Group generally. For the second year running, Dangote Cement is winning the Pearl overall award, emerging as the PEARL of the Nigerian Stock Exchange.

Lafarge to sell excess electricity to boost Nigeria’s output

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afarge Cement WAPCO Nigeria Plc (WAPCO), plans to sell about 40 megawatts of excess electricity to help ease power shortages in Nigeria.

The company, 60 percent owned by Paris-based Lafarge SA (LG), uses only 40 to 50 megawatts out of 90 megawatts generated by its local power plant, Michael Awanayah, the company’s general manager of business transformation, said recently at the West African Power Industry Convention in Lagos, the commercial capital. “We are looking to be one of the first manufacturers to sell power and help reduce the power shortage,” he said

BY PETER EGWUATU

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igeria is becoming the centre of attraction by foreign investors in spite of the challenges facing the country. This shows that the country’s potentials are enormous and needed to be tapped and harnessed for economic growth and development; and that shows why investors from around the globe are looking for avenues to invest in the country and Africa as a whole.

It should be noted that in recent time, countries in the world have sought long-term solutions to their economic and development challenges, especially the factors hindering their growth, development and capacity to compete with their counterparts on a global platform.

With countries gradually recovering from the global economic crisis, the consensus amongst economists including the IMF is that the global economy will witness stronger growth in 2014 at 3.6 percent. For 2013, the estimate remains subdued at 2.8 percent. However, global growth is expected to increase in 2014.

The IMF expects average growth in Sub-Saharan Africa (SSA) to spike in 2014 (especially in Nigeria, Cote d’Ivoire, Mozambique) by one percent from five percent to six percent. The major factors underlying growth are strong domestic demand and private consumption, associated with investment in infrastructure, export capacity and higher global growth. With Nigeria’s Gross Dometic Product , GDP accounting for 20 percent of SSA’s GDP (according to IMF) the nation’s economic significance cannot be over emphasized.

To put Nigeria on favourable, competitive footing as global and regional growth is expected to increase in 2014, FBN Capital, the investment banking and asset management arm of FBN Holdings Plc, centred its 2013 edition of its annual investor conference on the addressing the challenges of growing the economy and measures required to enhance the nation’s competitiveness in the global market.

Kayode Akinkugbe, Managing Director, FBN Capital, said the company was delighted at the

Dr. Ngozi Okonjo-Iweala, Co-ordinating Minister for the Economy andMinister of Finance

How FBN Capital drives Nigeria’s competitiveness on global scene outcome of the conference, especially the resolve by the public and private sector to seek more areas of partnerships to accelerate national economic growth and development.

“The conference identified key areas of focus that requires immediate attention to ensure we grow our economy along the lines of several projections. We are quite confident that conversations held during the conference will inspire the adoption of reforms and policies that will yield tangible results,” he said.

The 2013 FBN Capital investor conference also saw several presentations that highlighted the challenges of growing the economy whilst pursuing fiscal restraints, measures taken to enhance the nation’s competitive edge among its counterparts and framework with which to project the nation’s development from a frontier to a growth market.

Addressing the conference via pre-recorded video interview, Dr. Ngozi OkonjoIweala, Co-ordinating Minister for the Economy and Minister of Finance said one of the government’s key objectives was to ensure Nigeria’s growth is sustainable, with the capacity to create jobs.

According to her, the rebasing of the nation’s GDP and fast growth are two factors needed for Nigeria to be the

largest growing economy in Africa. “Nigeria is already seen as a hub. Our banks are present in almost all West African countries and government is working on developing varying sectors of the economy, especially for the purpose of creating jobs. We must strengthen sectorial development, but at the end, we don’t just need growth for growth, but we need growth, to deliver,” Olusegun Aganga, Minister of Trade and Investment,said with the on-going recorded growth, Nigeria will emerge the 13th largest economy in the world by 2050, quoting a PriceWaterHouseCoopers (PWC) report. “Nigeria is the 10th largest producer of crude oil globally with 37 billion of proven revenue, and has the 11th largest oil reserves in the world. It has a large market and a strong workforce. Also, the nation is well placed to explore the potentials offered by ECOWAS and it is one of the fastest growing markets in the world, with diverse pool of resources to further fuel its growth. With a debt to GDP of 20 per cent, Nigeria has large fiscal space to operate in,” he said.

He said the government has started an extensive reform oriented transformation process which cut across the agricultural, power, fiscal, industrial banking and the oil and gas sectors, among others.

He said the hunter report rated

Nigeria the number one destination of investment in the whole of Africa for the second year running.

“To enhance our position, the administration is focussing on reforms.

The Federal Government has started an extensive reforms, oriented transformation process which cut across key sectors: Agricultural, power, industrial, banking, oil and gas, among others.

He said it is essential the nation focuses on areas where we need to be competitive in order to attract the venture capital private sector players so that we can acquire affordable finance for the economy to grow.

Also at the conference, FBN Capital analysts predicted a modest multiple expansion in equities in Nigeria in 2014, along with a host of other economic forecasts. While giving the firm’s 2014 outlook on equity/fixed income views, Olubunmi Asaolu, Head, Equity Research, FBN Capital, said “A modest multiple expansion is expected on equities and banks and the cement industries are slightly favoured over consumer goods.

To our minds, consumer goods have expended the market’s goodwill”. The prediction, which is expecting to see more investment in the nation’s equities, is in line with Nigeria’s present position as an attractive hub for investment.

Vanguard, MONDAY, DECEMBER 2, 2013 — 25

Corporate Finance

Tripple Gee to leverage product diversification to grow earnings

By NKIRUKA NNOROM

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riple Gee & Company Plc has announced readiness to improve its earning for the benefit of all stakeholders through diversification of its product lines.

Addressing shareholders at the 23 rd Annual General Meeting, AGM, in Lagos the Chairman, Sam Idowu Ayininuola, said that the company is consolidating its core business by the introduction of innovative value added products and services.

He listed some of the products and services to include securing of certificates with the certidoc, production of recharge vouchers and PIN mailer.

Ayininuola noted that the ground work for the diversification has been laid, adding that the company is already sourcing for needed capital to actualise the plan.

“You can be rest assured that we are doing all it takes to get the best interest rates to avoid jeopardizing the future of our beloved company,” he assured.

He said that inspite of the persisting global and national economic challenges the company faced in 20123, it did not fare badly.

Speaking on the operating environment for the year, he said, “You will agree with me that during the period under review, the global economy has faced many challenges. In recent times, the United State of America, which is the largest economy in the world, has not been able to pay its debts because of its inability raise debt ceiling.

“In the words of economist, some of whom see it as cliché, when America sneezes, the world catches cold. The

turbulence in the American economy has caused some ripples in the global financial system.

“Cliché or not, it is important to note that Nigeria, as part of the international community and a player in global business, has not been left out of the effects of the upheavals in the world economy, which has been on for some years.

As a matter of fact, no country is insulated from the global challenges we now face.”

For the year under review, the company recorded 62 percent growth in turnover from N619.812 million to N1.003 billion in 2013. The ore-tax profit was N26.90 million from a deficit of N8.91 million in the previous year, representing 202 percent

L-R:Permanent Secretary, Ministry of Health, Lagos State Dr Femi Olugbile; Managing Director, IVF Zech International, Prof Nikolas Zech; Managing Director, Pathcare, Dr Pamela Ajayi and founder, the Bridge Clinic, Dr Richardson Ajayi durin the inauguration of the clinic in Lagos. recently.

Kakawa Fund to reward unitholders with N52.14m

By WILLIAM JIMOH

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akawa Guaranteed Income Fund, an open ended unit trust scheme approved by the Securities and Exchange Commission, SEC, is set to reward its unitholders with additional N52.14 million, representing 35 percent of its net income in accordance with the provisions of the Trust Deed.

The fund made a net income of N 148.98 million after deduction of guaranteed liabilities and other expenses, which placed it profitably above its projections for 2012 financial year.

Chairman, Board of Directors of the Fund, Mr. Laoye Jaiyeola, stated this during the company ’s 2012 Annual General Meeting, AGM, held in Lagos. He explained that in 2012, the fund stayed within

CBN’s financial inclusion yielding result — Ede

By NKIRUKA NNOROM

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increase. The profit after tax also increased by 202 percent from N6.234 million in 2012 to N18.83 million in the year under review. Earning per share rose by 202 percent from N1.26 to N3.80. However, a 2kobo per share dividend was approved by shareholders at the meeting.

he Head, Mass Market Segment of Diamond Bank Plc, Mr. Osita Ede, has commended the Central Bank of Nigeria (CBN)’s financial inclusion initiative, saying that it has started reducing the level of unbanked population in the country.

Ede made the remark during the Diamond Bank SavingsXtra season six draw at Ojuelegba, Lagos State where N12.750 million was given out to 21 customers that emerged in various categories of the promo, including a salary for life package.

He specifically applauded the apex bank for coming yup with a policy that allows banks to open account for customers that do not have any means of identification.

He said, “The people that have not being able to open account could be because of ignorance or non-possession of Identity cards and other documentation required. Now, CBN has come up with a policy where they have three categories of savings account customers.

Customers, who do not have means of identification, can still open an account, but they will some restriction placed on their accounts.” Meanwhile, 10 winners emerged in the targeted draw with five clinching N100,000 each, while another five took home N50,000 each. Also 10 customers won N1 million each in the monthly draw; one customer won N2milion, while another emerged salary for life winner, where N100,000 will be paid monthly to the lucky winner over the next 20 years.

the prescribed asset allocation of a minimum of 75 percent fixed income securities and maximum of 25 percent equities.

According to him, “As at December 31, 2012, the Net Asset Value, NAV, of the fund was N3.19 million with 2,308 unitholders having 3,162, 830,000 units. Despite the unstable interest rate regime and the highly volatile nature of the capital market in the year 2012, the fund met its obligations of guaranteed returns to subscribers as well as capital preservation.

On the fund outlook for 2013, he said; “We expect that the year 2013 will not be different from the previous years. Following the avoidance of the ‘Fiscal Cliff’ in the United States, uncertainties surrounding the Euro Area are expected to set the pace for the performance of economies around the world in 2013.

Developing countries that thrive mostly on exports are expected to feel the heat as foreign demand continues to wobble.

BRIEF SPAN to work with FG to prevent dumping of scientific product

By PETER EGWUATU

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he Scientific Products Association of Nigeria (SPAN) said it will work with the Federal Government to stop dumping of sub-standard scientific products into the country.

The President of SPAN, Mr. Gbolade Famoriyo, who disclosed this to newsmen, weekend in Lagos, ahead of the association’s planned Lab & Scientific Nigeria Expo 2013 scheduled to hold from 3rd -5th November at Eko Hotel, Lagos said, “We are working towards enforcement and regulation of importation of scientific products in order to prevent Nigeria becoming a dumping ground for substandard products.”

He further stated that Nigeria has the capacity to produce some of the scientific and engineering products, stressing that high cost of production in the country has impeded their effort and thus made them uncompetitive.

According to him, “Electricity supply is key to any production. So, if there is constant supply, it will help reduce the cost of production in Nigeria. I believe Nigeria can be better than China when there is regular supply of power. Members of SPAN are willing to manufacture in the country but the high cost of production has prevented them from doing so, hence we now rely on sub-standard products which is not good for our country. So, if we must import, then we should import standard product and that is why we are making effort to work with the Federal Government to come out with a framework for importing scientific and engineering products.”

While commenting on the association’s proposed Expo 2013 in collaboration with the Federal Ministry of Economic and Technology, Famoriyo said, “New business platform of the analytical and lab equipment from Germany will open its doors in Lags as 14 German manufacturers of analytical and lab equipment will show their products at an exclusive trade show and congress.” According to him, “All interested professionals are invited to visit the show free of charge.

C M Y K

26 —Vanguard, MONDAY, DECEMBER 2, 2013

Banking & Finance

Zenith Bank named bank of the year Nigeria by the Banker

By OMOH GABRIEL, Business Editor

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enith Bank PLC has been named bank of the Year Nigeria by the Banker, a publication of Financial Times of London. In a statement on its website the Banker said “Zenith has come a long way since it was founded in 1990.

The bank, which had $17bn of assets at the end of 2012, is the largest in Nigeria based on Tier 1 capital, according to The Banker’s latest Top 1000 rankings. By the same measure, it is the sixth biggest lender in the whole of Africa.

“Zenith’s performance in the past two years has been particularly strong.

One of the banks to come through Nigeria’s 2009 financial crisis relatively unscathed, it made a record pre-tax profit in 2012 of N102 billion ($651m). This year looks even better. It posted profits before tax of N83 billion for the first nine months, up 10.4 per cent

year on year. Analysts forecast it to earn about N106bn for the full year, which would amount to a return on average equity of close to 20 per cent.

“Zenith’s results for 2013 are all the more impressive given the headwinds that Nigerian banks have faced recently. They have had to contend with falling interest rates on

government bonds, at least in the first half of the year, and an increase in the levy they pay to AMCON, a bad bank set up by the government amid the financial crisis.

Zenith has managed to overcome these by making plenty of effort to expand its loan book. It has also been growing its non-interest revenues. “[This year] will be a little bit difficult for the banks,” says Godwin Emefiele, the bank’s managing director.

“But it will still be a good year. Banks have

got to diversify their revenue base. That’s what most of them, particularly Zenith, are doing.”

He adds that since the bank was established, it has invested in technology to improve customer service, something that has enabled it to grow its deposit base faster than most rivals. “We’ve always known we need strong technology to back up customer service,” he says. “We will continue to do that.”

NDIC voted most outstanding public institution

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he Nigeria Deposit I n s u r a n c e Corporation (NDIC) has emerged as the most outstanding public institution in the Finance, Trade and Investment category of the 2012/2013 Service Delivery Awards for public institutions in Nigeria.

A civil society coalition, the Independent Service Delivery Monitoring Group (ISDMG) which organised the delivery service awards presented a trophy to the Corporation for topping the Finance, Trade and Investment category after a rigorous exercise that involved public opinion and technical assessment on 300 public institutions by over five million Nigerians who voted through mobile SMS, internet and questionnaire survey.

Presenting the award to the Managing Director/ Chief Executive of NDIC, who was represented by the Corporation’s Board Secretary/Director, Legal Department, Mr. Alheri Bulus Nyako at the 2012/ 2013 service delivery awards in Abuja, the Executive Director, Independent Service Delivery Monitoring Group (ISDMG), Dr. Chima Amadi said the NDIC came top owing to its unequalled ratings by respondents in the core areas of assessment of public institutions. He listed the areas as transparency and fiscal discipline, budget implementation, prompt response to enquiries, contributions to the economy, sustainable and people oriented programmes and web visibility of the public institutions.

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Vanguard, MONDAY, DECEMBER 2, 2013 — 27

E-Commerce

Commodity Index Nov 22 - Nov 28, 2013

90% Nigerians still on feature phones — Bole Stories BY JONAH NWOKPOKU Out of the 140 million Nigerians who use mobile phones, only an approximately 12.7 million use data connected phones, meaning that over 90 per cent of Nigerians still use feature phones, said Robert Bole, Director of Innovation, Broadcasting Board of Directors, Voice of America.

Bole stated this while speaking on mobile opportunities for Africa at the inaugural edition of the Nigerian Apps Summit held in Lagos recently.

He said that, “A mobile opportunity that not only exists for Africa but the rest of the world is how services will connect from low bandwidth populations to high bandwidth services. In Nigeria, there are approximately 12.7 million data connected phones out of total subscription of140 million. This implies that more than 90 per cent of Nigerians are still on feature phones,” he said.

“But we have to acknowledge the fact that feature phones that are still coming into the market today are not the phones of yesterday.

They run java scripts that allow for users to interface with social media, browse basic web pages and get active content feeds. And there are companies starting to focus on that market,” he added.

He explained that, “Successes like 2go, Whatsapp and even Nigeria’s own Paga are very promising starts. I think the real opportunities are not just building services for this feature phones but also extending high bandwidth services to these phones. The sophistication of technology platforms like Twitter is enabling new opportunities to extend high customer

interaction to non-data customers.

“Even though 3G and 4G networks are advancing quickly across African landscape, there will still be millions and millions left out of this progress. There is a divide today and it would only become more apparent, so when you start to grow new companies start to develop features that will enable majority of the audience to own

Kaymu introduces free listing period to boost entrepreneurship

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n l i n e

m a r k e t p l a c e , Kaymu.com.ng said that all listings through the platform nd from December 22 to 31st, 2013 would attract no charges.

Kaymu who disclosed this in a statement made available to Vanguard said the gesture was a way of fostering entrepreneurship in the country.

Speaking on the offer, the Managing Director of Kaymu, Massimiliano Spalazzi said that entrepreneurship is an integral factor in the growth of any nation and that kaymu.com.ng recognizes the drive of the Nigerian youths and has provided a safe online platform to conduct business.

He said, “As a way of f o s t e r i n g entrepreneurship, Kaymu has put processes in place on its platform to ensure smooth and profitable trading. One of such

moves is the introduction of the Kaymu Safe Pay which works as an Escrow service by allowing buyers pay directly into Kaymu’s secure account and transferring the money to the seller only when buyer is satisfied.

A more recent move is the introduction of the zero commission month which nd runs from the 22 of December till the end of the year.”

He added that, “Being an organization driven by the satisfaction of both buyers and sellers and one that understands the value of entrepreneurship, the zero commission month was put into place to continually encourage sellers by allowing them list products without commission during this period,” noting that, “This is in line with the company’s commitment to empower youths and small and medium scale business owners as well as facilitating the development of the economy.”

Cross section of students of Carol School Nursery And Primary School, Agidingbi Ikeja Lagos. during Macleans Milk Teeth School Activation C M Y K

28 — Vanguard, MONDAY, DECEMBER 2, 2013

Cover Story Rice import policy he policy of the Federal government is noble and desirable. Any country that is forward looking, will want to pursue that route. The Minister of Agriculture is clear in his vision to grow rice locally, as we have more than 60 percent arable land in Nigeria. Government felt that we should discourage import and encourage our local rice production. The government did not take into consideration, the harm that smugglers will unleash on this noble policy. Now, the importers are put on hold because they cannot compete with the prices of smuggled rice, neither could the farmers and processors.

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Why the policy First, the Government did not collaborate effectively with the real stakeholders in the rice business.

Second is the damaging effect of duty differences between Nigeria and neighbouring West African countries. Nigeria’s duty is 110 per cent, whereas that of Benin and Cameroun remained at 30 per cent.

People who do not have the interest of the country at heart moved their businesses to Cotonou and Cameroun.

Although not directly involved in smuggling, their action facilitated the smugglers activities.

The cost of smuggled polished rice at N6, 000 is cheaper than N6, 500 paddies that the farmers sell to millers.

The farmers needed to make some margins to cover the cost of clearing and maintaining the land.

The process of rice production is as follows; Farmer plants rice and produce paddy (Raw) rice.

The farmer sells the paddy rice to the processors who turn the rice into finished products.

The Processors are no longer buying paddy from the farmers because the price is not attractive for business. As C M Y

a result, the farmers are threatening to stop producing.

Government involvement t this point, the government was informed of the situation. The Government has seen that there is disconnect and they are trying to fix it. In the last three weeks, there have been some attempts at reducing smuggling activities but how long this will last? We do not

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Efforts to make the policy work The Government did encourage the farmers by giving them fertilisers. This gesture has produced the modest result of raising commercial rice production from zero level to the state it is now. Apart from fertilisers, the government was willing to get the millers to buy rice paddy from them. Paddy rice is raw rice that has not been processed.

RIMIDAN (Rice Millers Importers association of Nigeria) as a body donated 150(One hundred and fifty) patrol vehicles to the Customs to assist in policing the borders.

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r. Tunji Owoeye (FCA) is the National Chairman Rice Millers Association of Nigeria (RIMIDAN). He has been involved in the commodities business for over 25years. He also holds other strategic positions in the Nigerian Agro-Allied industry; former Chairman, Board of Trustees Association of Cashew Importers/Exporters. He is the current Chairman Agric Import Association of Nigeria and the MD/ CEO of Elephant Group of companies with offices in Senegal, Cameroun, Ghana and Cote d Ivoire.

In this interview, he posited that phased import substitution is the lasting solution to the challenges facing the rice industry in the country. Excerpts: his Nigerian counterpart is closing shop.

How to address the problem Government should introduce a Phased –ImportSubstitution- Policy. They should begin by inviting the Drivers of The Value Chain in the rice business: Farmers Association, Processors/ Millers and the Importers/ Marketers associations.

Added to this will be, representatives of the

Nigeria’s duty is 110 per cent, whereas that of Benin and Cameroun remained at 30 per cent, people who do not have the interest of the country at heart moved their businesses to Cotonou and Cameroun

know.

As we talk now, Cotonou port is awaiting to discharge half a million tons of rice. This year about 1.5million tons of parboiled rice has been discharged in Benin all heading for the Nigeria market through land routes that are supposed to be banned. While the Benin importer is getting wealthier,

•Tunji Owoeye

,

Ministry of Agriculture, Finance and Central Bank of Nigeria; the Customs and Police. We call the body Rice Development Council. Its objective will be to make sure that Nigeria is self sufficient in rice production within a reasonable time limit. The Government should include these three value chain drivers in their planning.

How they will deliver Farmers: The government gives farmers fertilisers and asked them to produce X quantity. Both parties will agree on targets. Those who meet target will be given further incentives, while those who fail will have to work more to earn incentives.

Processors: Look at their capacities, task them according to their capacities.

Importers: The remaining capacity, you give to importers.

Give a time frame to this arrangement.

There must be a monitoring unit to ensure that all parties work towards the planned outcome. This is the only way the industry can grow.

Depending on foreigners to sort out our agric challenges will not work.

How prepared is RIMIDAN? As long as we are factored in, we will go all the way. The importers have the largest capacity and have access to funding. We are ready to invest in all the levels of the chain; Farmers, Processors and encourage the people in the market. We are ready to encourage local production and take over the mills from

the Minister but the government must be ready to agree with the import substitution strategy we put in place. The marketers and importers are the ones that own the business; they must be encouraged to make sure that the backward integration intention of the government is achieved.

Government losing revenue ocal production presently is less than one million tons. The market requirement is over 5 million tons. The difference presently is taken up by smugglers, while the government is recording zero revenue at the borders.

This body should have the backing of the government to divulge/expose economic saboteurs in the sector and government must be ready to deal with these saboteurs decisively. For smugglers to be having their way some people must be giving them backing.

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Customs The top hierarchy in the customs command is serious about checking smugglers activities but they need empowerment in the areas of equipment and manpower. A number of customs officials have lost their lives in recent times in the hands of desperate smugglers.

The Import Substitution Policy will work when the government considers the input of the Value Chain Drivers - The real stake holders.

Vanguard, MONDAY, DECEMBER 2, 2013 — 29

C M Y K

30 — Vanguard, MONDAY, DECEMBER 2, 2013

Interview

Innoson plans mechanic schools to suppor t FG’s skills acquistion — Innoson Motors boss

•Mechanic workship

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is passion is to return Nigeria to the good old days when Nigerians dreamt of what brand of new car to drive. He detests a situation where an average Nigerian end up owning a second hand car, which most times constitute environmental hazard due to the dangerous fumes emitted into the atmosphere.

Dr. Innocent Chukwuma is the innovator of the first Made in Nigeria vehicles. Today, Innoson vehicles are acknowledged as the Nigerian brand as the federal and state governments now partner with his company. In this interview with Charles Kumolu , Dr. Chukwuma espouses his vision to see every Nigerian drive a brand new car.

As the first indigenous vehicle manufacturer in Nigeria, how do you cope with the huge demand for your vehicles?

When we started, our vision was to cover the entire African continent, and we remain committed to that vision.

Presently, our manufacturing plant at Nnewi is built to service the entire African continent, and good enough we have been meeting up with market demands. Our strategy is to plan futuristically, knowing that huge orders will come, and as it stands today, we are able to meet up with the huge demands. We have the manpower and modern technology to cope with expected challenges.

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•Dr. Innocent Chukwuma

It is obvious you have made a sudden in road into the Nigerian auto market, what is the secret?

Well, there is a saying in Igboland that the market you sell is the one that you know much about. In this business at the risk of sounding immodest I will say that I understand it, and know the terrain. I started my business life dealing in automobiles, first motorcycles, and later we graduated to motor vehicles.

Today, we manufacture trucks, SUVs or what most people call “jeep”. We also have buses; refuse disposal vehicles, pick-ups and many others. So its an achievement based on experience and knowledge.

Investment revealed that the multinational Nissan company has written that they want to partner with your company in vehicle manufacturing in Nigeria, have negotiations with them began? What is the scope of the cooperation?

Recently, at the Federal Executive Council meeting, the Minister of Trade and

What is your reaction to President Jonathan’s desire to protect local industries

Y

es, I am aware that they have made such move, and on our part we are ready to go into any cooperation that will boost the nation’s economy, and lead to increased productivity and provision of jobs for our youths. Let me therefore say that exploratory talks are ongoing and at the appropriate time the cat will be let out of the bag.

from foreign domination?

I believe this government means well for the country.

For the first time in our history, we have a President that is delivering on his promises, one after the other. His support for local industries is phenomenal, and unprecedented. Take for example the improvement in power supply and access to loan facilities, and even the transformation going on in other sectors, you can see that he means well. So this is something we as industrialists are grateful for.

As a company we can only complement such good gesture by supporting government in whichever way we can.

For instance, we plan to build mechanic schools to teach our young ones technological skills as mechanics and technicians that will enable them survive in our ever changing world of technological innovations. We will also continue to support both the federal and state governments in the realization of their job creating programmes.

How durable are your vehicles and how can customers access the spare parts across Africa?

The spare parts for our vehicles are available at our spare parts outlets in all parts of Nigeria, and countries in Africa where you find our vehicles. So it’s not a hindrance or problem at all.

As for durability, you can easily attest to this as you see

our vehicles on the road. They are as durable as other standard vehicles, and are officially certified by the relevant government agencies both locally and internationally.

So your company has outlets in other African c o u n t r i e s ?

That is what I tried to explain when I said that our vehicles parts go with our vehicles wherever we supply Innoson brands. It’s a deliberate policy by us to ensure that users don’t run out of stock in terms of servicing their vehicles. But of course, you know that brand new vehicles usually require very minimal change of spare parts, but it is standard practice worldwide to support your customers with maintenance, and to us this is a serious obligation.

Power is a major factor in your business, how are coping with power g e n e r a t i o n ?

When we started this factory, the power output was about twenty percent, but today, we have about seventy to eighty percent. So there is a lot of improvement with this government. With this development, our industry will develop more, because when we started, we were getting about twenty percent from the national grid, but now, there is a remarkable improvement. We are so happy with the present government and what they are doing in power.

Vanguard, MONDAY, DECEMBER 2, 2013 — 31

Homes & Housing Finance

Ogun allocates 12.72% of 2014 budget to housing

By YINKA KOLAWOLE

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gun State government is to devote 12.72 percent of its projected income in 2014 to fund housing development and urban renewal programme in the state.

Governor Ibikunle Amosun disclosed this during the presentation of the state’s 2014 budget proposals of N210.21 billion on the floor of the state House of Assembly in Abeokuta. He said that a total sum of N26.74 billion, representing 12.72 percent of the total budget estimates, is being set aside for the provision of of affordable housing and urban renewal programme in the state in 2014.

Amosun noted that the allocation will ensure the creation of an enabling environment for housing development and urban renewal in the state, while also helping to tackle challenges in environmental management. “We see housing as both a social necessity and an economic opportunity. Our policy is focused on creating the enabling environment for housing development as well as directly undertaking interventions through the ministry of housing, housing cooperation and Ogun Property Investment Corporation,” he said.

The governor said the ministry of housing will tackle major housing projects such as the Kobape residential estate, a 50-hectare mixed development with full infrastructure such as water, power sewage systems and internal roads in the greater Abeokuta region. He said the scheme will comprise of serviced plots and fully furnished houses at various price ranges. He remarked that a similar scheme was

already being developed by the ministry in the Sagamu and Ota areas, in addition to undertaking the new town development and Abeokuta City Centre projects.

Amosun further revealed

that both OPIC and the state’s housing corporation will concentrate on executing the Agbara Urban Renewal and Housing programme, Ijebu Ode New GRA projects, Orange Valley, Abeokuta

NLC, developer in N960bn housing deal for workers N

igeria Labour Congress (NLC) has sealed an agreement worth $6 billion (about N960 billion) with a property development firm, Kriston Lally EPC Nigeria Limited and its foreign partner, Kriston Lally Enterprises Attikat, for the construction of affordable houses for workers.

A statement by NLC revealed that the deal will ensure the construction of over 600,000 housing units accross the country, with the foundation of the first phase planned for the second week of December. It further stated that arrangement

to commence construction of the project was concluded when the NLC President, Mr. Abdulwahed Omar, recently led other members on a visit to Athens, Greece, to finalise the agreement with the partners, which included funding and manpower.

The NLC said the project is aimed at providing an opportunity for its members accross the country to own their own houses, adding that the houses would be provided to members of Labour in both public and private sectors at the interest rate of two percent. The

Lush offers Nigerians luxury home accessories

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Urban Renewal project, New Makun City projects at Sagamu Interchange, Isheri Commercial City projects as well as building of over 500 houses for the state’s civil servants.

ush Luxury Wall Coverings is offering middle and high income Nigerians access to global, prestigious luxury home furnishing accessories.

The firm is involved in design selection, sales and installation of luxury wall coverings to commercial and residential facilities.

Located on Ozumba Mbadiwe Street, Victoria Island, Lagos, it offers some of the world’s most prestigious luxury brands like Versace Home (Italy), Phillip Jefferies (USA), Architects Paper (Germany), Fabcote

Haute Couture (South Africa) and Porsche Design Studio (Germany).

Lush has the official and exclusive agency in Nigeria of all the brands in its portfolio, thereby giving its clients unparalleled customer service and absolute confidence in the authenticity of its products. In addition, it provides a luxury experience from inexhaustible classical and modern wall coverings to suit the ambience and beauty of the clients’ interiors. The coverings are targeted at a decidedly discerning, savvy and affluent clientele.

proposed housing project would consist of one-bedroom, two bedroom detached and semi-detached, three bedroom detached and semi-detached, four bedroom bungalows and four bedroom duplexes detached as well as semidetached, the statement added.

Omar was quoted in the statement as saying that the trip to Greece is rewarding. “When we came on board, we promised our members that we will do as much as possible to ensure that as many workers as possible get shelter before they retire, because we believe it is one of the very serious issues facing Nigerian workers today.

The partnership is about providing quality and affordable housing for the Nigerian workers. We have found in this Kriston Lally a very formidable partnership that we can rely on, we can trust and we can work with.

We are also reassuring Nigerian workers that by the grace of God, when we go into this it is going to continue to have a multiplier effect until Nigerian workers are comfortable in the area of housing,” he remarked.

BRIEF BoE cuts mortgage support to avoid housing bubble

B

ank of England (BoE) moved to head off the risk of a housing bubble in Britain by announcing it would put the brakes on a scheme launched last year to help boost mortgage lending.

The central bank said the Funding for Lending Scheme (FLS) would cease to offer banks incentives for mortgage lending and instead be refocused on helping small firms to borrow. The news caused shares in housebuilding firms to tumble.

Britain’s economy and its housing market have staged an unexpectedly strong turnaround since the FLS was launched by the BoE and finance ministry in July 2012 in an effort to spur the longdelayed recovery by unblocking credit markets.

“Given the access to credit for households now ... it would no longer be appropriate or necessary for us to have our foot on the accelerator. It’s better to shift into neutral,” BoE Governor Mark Carney said.

19,400 FG workers benefit from housing loan

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total of 19,400 federal civil servants have benefited from the Federal Government Housing Loan Scheme, Head of Service of the Federation (HOSOF), Alhaji Bukar Aji, has said.

He said this at an interactive session organised by his office for state-based Federal Government civil servants in federal Ministries, Departments and Agencies (MDAs) in Asaba.

Represented by Dr Clement Illoh, Permanent Secretary, Federal Ministry of Labour and Productivity, Aji said those who applied for the facility and were yet to be granted should exercise patience, adding that their requests would be looked into.

A cross section of the civil servants called for the abrogation of the National Housing Fund (NHF) and a refund of all contributions made by workers to them.

Some of the workers, according to NAN, said NHF had never profited them in anyway and complained that there was no information on the fund’s activities, as loans were not granted them years after they had applied for them.

C M Y K

32 — Vanguard, MONDAY, DECEMBER 2, 2013

Insurance BRIEF PenCom rolls out contact centre

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he National Pension Commission in response to the increasing need of pensioners and other stakeholders in the pension industry to get adequate information concerning their savings and other operations of the commission have established the Contact Centre information network.

Pencom said the Contact Centre would provide the public with an easy means of contacting the Commission to lodge complaints or make enquiries about pension issues.

According to Emeka Onuora, Head Communication Department at Pencom, the Contact Centre which is a more improved method of handling complaints from the public will offer the public the opportunity to relate with the Commission via telephone call and e-mail without necessarily visiting Pencom offices to make enquiries or lodge complaints.

Though the Commission had previously engaged the use of telephone, e-mail, social media and letters to resolve issues raised by pensioners and the general public in the past, it was not able to track the history of complaints or enquiries since such transactions could not be stored electronically.

“Previously, the Commission has a decentralised process through which it deals with complaints and requests from the public.

Requests from members of the public usually come in various ways, such as telephone calls, e-mails, social media and letters. The decentralised manner in which complaints are addressed resulted in pension contributors/retirees issues not been stored electronically.

Consequently, this led to a difficulty in tracking and retrieving a history of previous complaints lodged by clients.

The total customer satisfaction thus falls short of expectations leading to dissatisfied customers and the attendant negative perception about the services rendered by the Commission”, Pencom noted.

But Onuora explained that the newly adopted Call Centre model has been designed to take care of the challenges of the past since it can store information electronically and as well track the history of transactions.

C M Y K

Royal Exchange posts N7bn GPI Stories by ROSEMARY ONUOHA

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oyal Exchange Plc generated gross premium income of N7.61 billion in the 2012 financial year, against N6.82 billion realised the preceding year. This represents an increase of 11.58 per cent, its Chairman, Kenneth Odogwu, said.

Odogwu disclosed this to shareholders at the company ’s Annual General Meeting (AGM) in Lagos recently.

He said the company’s claims expenses during the year amounted to N1.63 billion, similar to N1.64 billion paid in 2011.

Odogwu noted that the firm’s expense increased by 15.13 per cent, from N1.85 billion in 2011 to N2.13 billion last year, adding that this translated into net income before overhead expenses of N3.54 billion, as against N3.17 billion of 2011, an increase of 11.91 per cent.

He said the firm’s investment income increased significantly by 35.10 per cent from N475.21 million in 2011 to

N642.02 million last year, adding that the appreciable recovery of the capital and money markets instruments enabled the firm to maximise returns from its quoted equities and cash portfolios.

He said the group achieved a profit before tax of N743 million, stressing that the achieved result was due to improvements in the performances of the group’s subsidiaries.

His declaration of the

board’s decision to pay a dividend of 4kobo per 50kobo ordinary share was accepted by the shareholders, who poured encomiums on the firm for paying dividend at a time many companies are facing challenges.

President of the Independent Shareholders Association of Nigeria (ISAN) Mr. Sunny Nwosu, lauded the company ’s courage to pay dividend to shareholders. He urged the company to sustain

the confidence reposed on it by doing what is right to shareholders.

Meanwhile, the company said that in spite of the operating environment experienced by the insurance sub-sector and the finance industry in general, it remained elastic in its performance thereby, exploiting new opportunities and maintaining a strong hold on its existing business since 2012.

L-R: Ajiborode Abiodun, Senior Brand Manager Fabric Care, Alegun Wilson, Human Resources Business Partner, Akinyemi Lolu, Finance Director, Graffiths Sandy, Marketing Director Fabric Care and Ekekwe Roy, Marketing Manager Fabric Care all of PZ Cussons Nigeria Plc at the media Unveiling of ZIP detergent new TVC in Lagos.

A. M. Best rates Custodian Stable A

.M. Best Europe Rating Services Limited has affirmed the financial strength rating of B (Fair) and issuer credit rating of “BB” of Custodian and Allied Insurance Plc. The outlook assigned to both ratings is stable.

The rating affirmations reflect A.M. Best’s

expectation that Custodian’s risk-adjusted capitalisation will continue to remain supportive of its current rating level. Additionally, the company’s competitive profile and operating performance are expected to remain solid.

Custodian’s risk-adjusted capitalisation is expected to remain at a strong level and going forward, A.M. Best

expects the company’s riskadjusted capitalisation to be supported by the robust earnings of the Group.

Prospective operating performance is expected to remain solid. The Custodian Group announced profit before tax of N2.5billion for the unaudited third quarter ended 30 September 2013. This indicates an increase of 89.5

Prestige assurance promotes staff

P

restige Assurance Plc has promoted some of its top management staff to higher levels.

In a statement, the company said that the affected staff include: Mrs. P.N. Jibrin-Yaro to Assistant General Manager (AGM)II from Senior Manager. She is a product of Obafemi Awolowo University and Lagos State University where she obtained Diploma in Business Administration and MBA Marketing respectively.

A Chartered Insurer of London and Nigeria (ACII), Mrs. Jibrin-Yaro has a wide range of experience in insurance practice.

Also promoted was Mrs. Eunice Olufunmilayo Aina from Senior Manager to Assistant General Manager (AGM)II. She is a 1992 graduate of Accounting from the Polytechnic, Ibadan, a Fellow of the Institute of Chartered Accountants of Nigeria, (ICAN),

a certified Information Systems Auditor (CISA) and a Certificate Member of the Chartered Insurance Institute of Nigeria.

She joined Prestige Assurance Plc in 2001 as Internal Auditor. She had wide range of experience in Accounting, Audit & Control. Some other staff were elevated from Assistant Manager to Manager; Snr. Superintendent to Assistant Manager; Superintendent to Snr. Superintendent as well as Assistant Superintendent to Superintendent.

On the whole, eight are in the category of Senior Staff while two are in the category of Junior staff.

The management said the promotion was in line with the tradition of the company to reward deserving staff to strengthen the management team to position the company to a greater height.

per cent over the N1.3 billion recorded in the corresponding period of 2012. Profit after tax increased by the same proportion from N1.14 billion to N2.1 billion, while the Group’s asset base increased from N40.9 billion to N47.2 billion, indicating 15.3 per cent growth within a nine-month period. The gross written premium was N19.8 billion from N9.4 billion.

Commenting on the ratings, the Managing Director, Custodian and Allied Insurance, Mr. Wole Oshin said “This is a welcome development. A. M. Best is the world leader in insurance ratings, and we are pleased with the stable outlook given the company. We will continue to address our operations to benchmark against the best in the world, with the view to improve this performance in the near future.”

Custodian and Allied Insurance Plc is quoted on The Nigerian Stock Exchange (NSE), and is approved by the regulatory bodies in Nigeria to offer insurance services, and provide services that extend beyond national frontiers.

Vanguard, MONDAY, DECEMBER 2, 2013 — 33

SURE-P: OKONJO-IWEALA’S WATERLOO. B

ut in Nigeria, it almost invariably ends up getting bogged down in colossal corruption. The minute government embarks on a multi-billion naira enterprise the sharp guys devise the plans to subvert it by robbing the programme blind. SURE-P is going the way of National ID Card Scheme, Obasanjo’s $13-16 billion IPP for which we had nothing to show until PHCN was privatized and the National Water Rehabilitation Scheme of another regime.

However, SURE-P is different in one respect – it was so hastily cobbled together, by the Finance Minister, and full of unattainable goals that the original document was ordered withdrawn by President Jonathan in less than six months. That was after millions of naira had been wasted printing the pamphlets and a multi-media campaign was underway to promote the illusion of progress. It was not OkonjoIweala’s finest hour.

The decision to junk the original SURE-P programme was one of the most courageous decisions of the President – given the global profile of the Federal Minister of Finance, Dr O k o n j o - I w e a l a .

Unfortunately, for the President and, more so, for the Minister, even what was left was bound to fail to meet the objectives set for it – even if no kobo was stolen. But, unknown amounts of the funds have been stolen already and the Senate might have discovered another whopping misappropriation of SURE-P funds. Corruption being so endemic in the Nigerian system, expecting a multi-billion naira scheme to be corruption free represented the triumph of wishful thinking over historical experience. Now SURE-P is in a mess and that is putting it mildly.

Before proceeding, kindly let me remind the reader that as far back as 2011 when SURE-P was announced by a confident, or was it overconfident, Minister of Finance, I had made the following observations; after providing a small catalogue of grandiose government programmes which had failed in the past. Writing under the title: SURE-P: SURELY A DEFECTIVE PROGRAMME, I made the following observations.

“Dr Okonjo-Iweala was also the Minister of Finance in 2004; when the National Economic Empowerment Development Strategies, NEEDS, was launched filled with promises – very few of which were redeemed. One cardinal un-discharged promise related to the launching of NEEDS II. Nobody in government

,

“Every great enterprise starts off with enthusiasm for an exalted aim and ends up bogged down in petty politics”, Charles Peguy, 1873-1914.

The decision to junk the original SURE-P programme was one of the most courageous decisions of the President

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discusses NEEDS I anymore; certainly NEEDS II has been consigned to the dustbin. She was the lead economic manager then as well. She should go and read again what she said in 2004. It might be embarrassing but it would be illuminating – to her. We have learnt our lessons.

Those are actually minor reasons for being skeptical about the new programme, titled, SUBSIDY REINVESTMENT AND E M P O W E R M E N T PROGRAMME (SURE PROGRAMME). The new skepticism is fuelled by SURE itself. The 17-page document, providing the justification for

subsidy removal, would be graded D by the most generous Professor of Economics at either Harvard or MIT for several glaring reasons.

It contains unpardonable omissions; deliberate or inadvertent and, worst of all, THE FIGURES DON’T ADD UP. In their eagerness to convince Nigerians to swallow the bitter pill of subsidy removal, the Ministers of government and Special Advisers, have sugar-coated the pill beyond reason; it might end up giving us diabetes. It is difficult to believe that they believe those figures themselves. If they do, their individual and collective grasp of figures is not as good as it should be. If they don’t, then, they have demonstrated why Nigerians should continue to distrust government.”

Now, the SURE-P programme is under attack on all fronts. While most Nigerians cannot feel its impact, it is now enmeshed in a looming scandal in connection with what Senators regard as N500 billion missing SURE-P funds.

Top officials of the CBN and the NNPC, which were also fingered as accomplices in this latest national probe were summoned to a Senate Committee hearing but failed to appear prompting Senator Abdul Ningi, one of the longest serving senators to lament that: “Today, again, we sat here glued to our seats for over one hour, awaiting the

arrival of the officials of the Nigerian National Petroleum Corporation or their agents and the Central Bank or their agents”. He went on to add that I have been a member of the National Assembly right from inception in 1999 and I have never seen this kind of impunity and disregard for constituted authority”.

The NNPC, meanwhile, had washed its hands of the missing funds claiming every kobo was paid to the Federation Account, as and when due. That shifts the focus back to the CBN and the Ministry of Finance.

Granted the Minister is not involved in any shady deals.

In fact, she is probably one of the few top level officials of this government with personal sound integrity. But, she created SURE-P, very hastily, without adequate controls to minimize the massive embezzlement that follows any major project or programme in Nigeria.

Already, the programme is generally perceived as a failure and with its decline in popularity the Minister ’s once towering reputation takes a dive also.

To save that reputation, it will not be bad idea if SURE-P is scrapped and replaced with a carefully crafted programme which promises less but delivers most of what is promised. A little success is always preferable to a major failure anytime.

Visit:www.delesobowale.com

Business & Economy Daytona Celebrates 50th anniversary with Super Auction

By PROVIDENCE OBUH

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gain, Rolex has cemented its place with the success recorded at the 2013 Aurel Bac’s Auction in November.

The auction, held in Geneva, themed: “Rolex Daytona Lesson One” is part of activities to mark the 50th anniversary of the Daytona and all 50 Daytona mechanical timepieces on

offer sold beyond original estimates with the Paul Newsman manufactured in 1969, a stainless steel outshining the lot as it went for a whopping sum of $1,088,889. The 50 Daytona

Unilever’s Sunlight fete consumers

U

nilever Nigeria PLC has commenced a national consumer engagement initiative with its Bubble man character rewarding consumers across the country for their patronage of Sunlight detergent.

Unilever’s Brand Building Director, David Okeme, said while the sunlight Bubble man will be visiting various neighbourhoods, the brand is celebrating consumer for their years of loyalty in various market and neighbourhood

across the country with gift items.

Okeme, said that the Sunlight has embarked on national activation and consumer engagement initiative which started in November and will run through January 2014.

“In the spirit of the season of celebration, the bubble man’s visit to various part of the country will also be supported by a special fun squad called the flash mob that will seek to excite the

consumers across the country on the brand’s fragrance.

watches were auctioned for a total of $13,248,167, quadrupling the auction’s pre-sale estimate.

Reacting to the development, Mr. John Obayuwana, the Chairman/ CEO of Polo Nigeria Limited, the official retailer of the Rolex including the Daytona watches in Nigeria said the outstanding success of the Daytona timepieces at the

ICM promo winners get prizes

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keja City Mall, ICM, has rewarded winners of its independence promo winners in Lagos.

The winners; three in number who were presented with dummy cheques of $1,000, $900 and $600 dollars for the first, second and third winners respectively, at the Central

Management Office of the mall brought to the climax the promo which commenced in October 2013.

Part of the prizes of the promo is that the first prize winner is to travel to Obudu ranch with his or her spouse for a treat alongside the prize money of $1,000, an equivalent of over

auction underscores the place of the Daytona model among discerning people across the world.

“What the world just witnessed is an endorsement of the classical standard of Rolex timepieces, especially the Daytona which brings with it timeless quality and reliability, reasons for which those who have arrived covet it,” he said.

N160,000. At the raffle draw that produced the winners, sponsors of the promo, Hermingsway Safari’s Outdoor Manager, Mr. Emmanuel Fariogun, said the brand decided to “sponsor the promo because the brand loves Nigeria, we want to give back in our own little way. It is also a way of giving back to the mall and to help our marketing as well.”

34 — Vanguard, MONDAY, DECEMBER 2, 2013

Micro - Finance Micro entrepreneurs to shun borrowing from banks Stories by PROVIDENCE OBUH

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he Association of M i c r o Entrepreneurs of Nigeria (AMEN) says they want to shun borrowing from commercial and microfinance bank to finance their businesses.

National Secretary, AMEN, Mr. Nwokeleme Frederick, who disclosed this to Financial Vanguard in a telephone conversation, weekend, said they have reached advanced stage to pool funds together in form of cooperatives to assist their members who have financial need to promote their businesses.

“We are going to pool about N10 million to enable us reach our members who are working with small capital nationwide, considering that a lot of fund is required for a small producer. The significant of this

cooperative is that it will reduce borrowing from microfinance banks and some commercial banks for our members.

“We are at the stage three in line with our mandate in making the country an industrialised nation. This stage involves establishing a financial institution to cater for members financial needs.

“This is the only way to get out of the activities of microfinance banks that uses the opportunity to exploit us with their skyrocketed interest rate.

“The bank of Industry has joined the vision, after series of invitation letter and negotiation.

They are now partnering with us. They have requested all AMEN members to submit their proposal and indeed we have submitted. They have been visiting our

members’ factories. I believe at the end of the visitation our members will laugh,” he said.

Meanwhile, the association’s business forum is scheduled to hold on December 13, 2013, where distributors and wholesalers will be opportune to access a variety of made in Nigeria product with a corresponding inauguration of the cooperative fund.

L-R: Mr. Mathieu Seguin, National Commercial Director, Nigerian Bottling Company; Muftau Fasasi, Finance Director, UAC Restaurants Ltd; Mark Hedderwick, Managing Executive, Emerging Markets and Director, UAC Restaurants Ltd; JID Dada, Executive Director, Corporate Services and Derrick Van Houten Managing Director, UAC Restaurants Ltd.

Yuletide: Mr. Biggs reward customers with Coke cup

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s part of the yuletide season celebration, Mr. Biggs Nigeria, in conjunction with Coca-Cola Nigeria, has unveiled coke cup to reward its loyal customers.

The promotion, with the title, “Colours of Fun Bonanza” comes in five

different cups of varying colours: red, yellow, green, blue and black, will span through November 22 to January 12, 2014, and over 120,000 coca-cola cups will be won. Speaking at the presentation ceremony, Managing Director, UAC Restaurants, Mr. Derrick Van Houten, said that the initiative is a way of saying “Thank you” to its numerous customers who have remained loyal throughout the year and also geared towards endearing new trials from customers who have not patronised the food giant a long time ago.

“To collect the cup, consumer should buy coke products worth N1, 500 from any Mr. Biggs Restaurant, nationwide and he gets a free cup, Houten said.

“We see this as an exciting adventure for consumers as there is always something

different to look forward to. It is an interesting quest which will keep the consumers coming back for the next cup colour and then the next one and so on until all five colours have been collected.

“In terms of communication, the promotion will be driven through various media platforms, both traditional and digital, to create the required awareness and education for our consumers.

The promotion is also of national spread, open to consumers in over 25 cities where we are located.

“It is interesting to note that these cups are real collector ’s items. They come in five different but very exciting colours (Red, Yellow, Green, Blue and Black) all amplifying the colourful nature of the yuletide season,” he said.

On what gave rise to

the choice of cup, Commercial Director, NBC, Coca-Cola, Mr. Matthew Seguin, added that the colours represented the company’s brand image, saying, “you are having a meal, you need to have a cup to go with the drink.” In his welcome note, Executive Director, UAC Restaurants, Mr. Joseph Dada explained that Mr. Biggs is going though rejuvenation and changes that will bring remarkable progress in QSR market, encouraging its partners to be part of the change.

“One unique thing about Mr. Biggs is that we try as much as possible to ride on the challenges that we see in the Quick Service Restaurant (QSR).”

Dada commended the coke company for the partnership, which he described to be stronger.

“This is the first time, going forward we expect more to happen. Mr. Biggs is going through rejuvenation, changes that will bring remarkable progress in this market.”

Etisalat offers SMEs N20m grants

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tisalat Nigeria has launched “Easybusiness Millionaire Hunt,” a scheme for Small and Medium Enterprises (SME) with a view to helping entrepreneurs realise their business ideas.

Director, Business Segment, Etisalat Nigeria, Mr. Lucas Dada, said that the Easybusiness Millionaire Hunt will go a long way to help young entrepreneurs who possess business ideas but lack the capital to pursue their dreams.

Dada said, “Easybusiness Millionaires Hunt is designed to reward Nigerian SMEs with the most viable business ideas with gift items such as business grants worth N20m, free training courses on entrepreneurial management and advisory services from the Enterprise

Development Centre of the Pan Atlantic University, office equipment and smartphones to kick off their business in the right direction.”

He said that the initiative would prove beneficial to SME owners across the country, explaining, “although the top 10 winners with the best business ideas will be rewarded with N2 million each, there are also other prizes to be won which include free business trainings at the Enterprise Development Centre of the Pan Atlantic University for the top 50 winners, in addition to getting office equipment to help them start up their business and over 200 Smartphone’s to be won on a daily basis throughout the promo duration.”

Vanguard, MONDAY, DECEMBER 2, 2013 — 35

Tax Matters

Modernizing tax administration with SIGITAS

By FRANK OBARO

Konga’s Black Friday and Cyber Monday sales debuts in Nigeria

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W

L-R, Emmanuel Etim,Joseph Etim,Brand Ambassador Of E-SCAN,Mr Albert Uduma,Managing Director/Chief Executive Officer Global Investment &Communication Limited And Ngozi Uduma,Executive Director Global Investments & Communication Limited.At the Press Conference to Annouce a new Product E-SCAN an Anti Virus Software For Andriod Mobile and Tabs Held at Planet One Mary Land Lagos.PHOTO;AKEEM SALAU

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ith government spending rising, it is important for revenue administrators to devise ingenious means of improving tax collection. One sure way of doing so is automation of the tax collection process.

Recently the Federal InlandRevenue Service (FIRS) announced ongoing efforts to automate tax collection by 2014 with the Integrated Tax Administration System (ITAS) to be implemented on a tailored made solution known as the Standard Integrated Government Tax Administration System (SIGITAS). The primary goal of this project is to reengineer the tax administration service delivery, eliminate gaps and redundancies in the current administrative assessment processes by leveraging technology in line with global best practices ultimately leading to simpler taxpayer compliance.

The objective is to transform the tax administration systems. Optimize its contribution to national development.Broadly speaking, automation of the tax administration process will engender transparency and efficiency with little human interface. The most vital aspect of SIGITAS will be to widen the tax net, deepen compliance, create a friendlier environment for taxation as well as curb leakages in tax administration. Also, the introduction of SIGITAS will standardize processes which mean reduced turnaround times for service offerings to taxpayers.

A major highlight of the deployment of SIGITAS is the automation of unified communications and enterprise collaboration, document management portal, as well as the automated Value added tax collection system. ITAS is also primed to support taxpayers in complying with regulations by reducing the administrative burden on them and providing easy access to information as and when due. It is expected that by the time ITAS is deployed taxpayers will be able to view their entire tax history of filing and assessment with the FIRS.

BRIEFS

The most vital aspect of SIGITAS will be to widen the tax net, deepen compliance, create a friendlier environment for taxation as well as curb leakages in tax administration

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In order jurisdictions where SIGITAS had been introduced such as Mali and Rwanda, taxpayers are able to use the platform as a one stop shop- with easy integration of all tax typesregistering a tax ID, data of transactions etc. SIGITAS also has the capacity to handle a robust framework for tax roll, assessment, collection, audit, objection appeals, document handling, reporting, external system integration, system administration and accounting for each user.Instructively SIGITAS offers a platform for taxpayers and tax authorities to interact in a more transparent and confidential manner, while also providing valuable information for the taxpayer.

The deployment of SIGITAS should be encouraged by all stakeholders for many

reasons. It will among other reasons reduce the country’s over-dependence on oil revenue with an expected surge in non oil taxes raising revenue figures needed for the development of social infrastructure. Also it is expected that the ITAS will signal a re-orientation of the FIRS personnel in terms of skills and capacity in the business analysis function to meet the objectives of the institution as well as strengthen the governance and transparency with fair and equal treatment of taxpayers.

And to suit Nigeria’s ethnic diversity, it can be configured to be multilingual and offers a water tight security protection.

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ut for SIGITAS to be successful there is need for synergy and integration with other similar projects across revenue generating institution such as the recently deployed Taxpayer Identification Number (TIN) for clearing of all imports into the country. This essentially brings importers into the loop of both the FIRS and Nigeria Customs Service simultaneously. This has impacted positively on the revenue collection profile into the federation account. So also for the Taxpayer Identification Number (TIN) integration currently ongoing nationwide which is being supervised by the Joint Tax Board (JTB). The FIRS also needs to build momentum in the synergy with the Corporate Affairs

Commission so as to integrate their processes especially in the area of database building which makes it easier to reach the untaxed or “hard to tax”.

A successful ITAS project will be one that is able to create value for all stakeholders by simplifying taxpayer compliance processes, keeps pace with t e c h n o l o g i c a l innovations, lowers cost of collection with seamless data and exchange of information synergy with key stakeholders (MDAs, banks etc) and support regulatory demands in a simplified manner. It willalso effectively encourage selfassessment filing of tax as against administrative assessment.

In summary, ITAS appears to be the answer to shoring up non oil tax in the face of dwindling oil revenues. A robust technology driven tax administration will definitely be able to achieve more if it fully optimizes the latent power it holds. The future of Nigeria’s social and economic development depends on a transparent and fair tax collection system that must keep improving to meet with social and infrastructural challenges.

igeria’s online retailer, Konga.com has brought online discount sales platform, Black Friday and Cyber Monday Sales, to Nigeria.

Dubbed ‘Fall Yakata,’ Konga said, the sale is the biggest ever undertaken by any retailer online or offline in Nigeria. “ You may have heard of Black Friday and Cyber Monday sales in the US and Europe. Konga.com is bringing you two days of mind blowing price slashes. Imagine the Play Station being sold for N60, 000 instead of N138, 000 regular prices, Ruby Woo lipstick that is normally N4, 000 sold for N2, 000 or Tecno Phantom A+ phone that is N39,000 that will be sold for only N19,000. You will find Christmas clothes that are normally sold for N30, 000 selling on Fall Yakata sale for only N10, 000,” explained Konga in a statement.

It added that the year has been an amazing year for Konga.com as they won the online retailer and best emerging brand of the year awards and moved to a new 120,000 sqr feet fulfillment centre and celebrated its one year anniversary.”

APR wins International Quality Crown award for excellence

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n recognition of its commitment to quality, leadership, technology and innovation, Africa Prudential Registrars Plc, a leading Nigerian registrar and the first to be listed on the Nigerian Stock Exchange, has received the International Quality Crown (IQC) Award in the Gold category.

The IQC Award acknowledges cutting edge companies from around the world for their firm commitment to excellence, innovation and leadership. The ceremony, which held on November 24 in London, was hosted by Business Initiative Directions, a leading global organisation that promotes quality culture in top businesses.

Peter O. Ashade, Managing Director/CEO of Africa Prudential Registrars, was on hand to receive the award, saying, “Over the years, we have built a reputation for innovation and high quality of service; we believe this is what has maintained our leading position in this sector in Nigeria.

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Advertising, Media & Marketing

How technology, innovation affect consumers Stories by PRINCEWILL EKWUJURU

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t is no exaggeration to say that technology and innovation, especially in this 21st century, has made life easier and simpler. Consider for instance, air-condition, fridge, washing machine ,television and Smartphones, to mention but a few, have redefined the way humans live and work on a daily basis.

Taking a look around, one will be astonished to find out how surrounded one is by a multitude of inventions which have transformed the way people live today.

It’s often overlooked, but the impact of technology we have around us has helped make a huge difference in society, helping to break down political, economic and social boundaries.

Conventionally, creating products that enhance people’s lives has been the key route by which companies can contribute to society.

Increasingly and even more so in today’s interconnected digital age, companies are now expected to go beyond being mere providers of desired goods and services.

Today ’s socially-conscious and democratized media environment means companies are now looked upon as corporate citizens operating in a global village.

Consumers and governments expect them to contribute to the societies in which they operate and co-exist.

In the early days, charitable contributions and donations were one way in which companies were seen to be

‘doing good’ in society beyond their daily business.

Nowadays, this is not credible. Consumers demand more from them; they expect organisations to contribute by the very nature of their being, their very business objectives need to resonate socially to survive.

Consumers purchasing decisions even hinge upon these perceptions.

Social contribution as a

From Left: Hon. Commissioner of Education, Imo State, Dr. Uche Ejiogu inspecting one of the classrooms with Airtel’s CSR Manager, Chinda Manjor and Regional Operations Director, South Region, Godfrey Efeurhobo at Airtel adopted Community Primary School, Amumara, Ezinihitte, LGA, Imo State.

Tecno deepens Smartphone market penetration …Unveils Phantom AIII

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ecno mobile has further deepened the smartphone market as it expands its market profile in Nigeria, with the launch of its latest addition in the phantom phone family, the Phantom

Universal Furniture expands brand visibility …opens retail shop in V/I

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niversal Furniture Limited (UFL), a subsidiary of Mood Creation Furniture Company has expanded its outlet to Victoria Island, Lagos.

Mr. Antoine Moudaber, the company’s Chairman, said the outlet offers the latest in international luxurious styles.

“With an international flavour to the mood creation design, the collection offers a variety of styles, colours and textureusing the same high-quality materials as leading brandname manufacturers in the UK, Italy, France and Turkey. UFL aims to appeal to all strata of

business concept wears a number of different names in the 21st century.

However, rather than attempt to explain these distinctions it is perhaps more prudent to understand a brief history of how social contribution has developed as systemic must-have for all companies in operation. LG Electronics as an organisation has made sizable social contribution in today’s digital age. LG’s leadership is consolidated in providing social value through the nature of its business, products and vision for the future.

the society.

“UFL recently brought in new management to drive a new strategy and the retail market development. With a shift from its core focus: multinational and government establishments we look to offer locally made high end furniture that competes with Italian and Turkish made furniture,” Moudaber said.

According to him, in 2009, the company purchased a new set of machines which spurred its exploration of mass retail production. Prior to this date, the brand was mainly available for large multinational and government establishments.

AIII. The highly anticipated smartphone was formally launched to the public at an elaborate ceremony in Lagos.

Speaking at the launch, Vice President, Tecno Group, Mr. Arif Chowdhury, said the device was designed with a passion to give every user access to innovation and affordability. “It is part of Tecno’s unwavering effort in expanding its offering which can be seen in this superior, innovative phone” he said.

According to him, the Phantom AIII is an upgraded version of the Tecno Phantom A+, it has a sleeker body and bigger screen than that of its predecessor, it comes with 6.0" captivating HD touch screen, 4.2android operating system, it has3.75g network capability, with1.5 GHz quad core processor.

The Phone is equipped with memory capacity of 16 GB rom plus 1 gb ram, 13megal pixels rear camera and 8megal pixel front camera. It also has social media application like Facebook, Whatsapp and Palmchat, applications.

The Vice president added that he was very glad to announce a new collaboration with BlackBerry, whichallows customers to find,preloaded on Tecno devices, the famous and popular BBM™ application.

Loyalty through Service Recovery

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eonard L. Berry and A. Parasuraman put it beautifully. In their classic, Marketing Services: Competing Through Quality, they describe superior service recovery as “doing the service very right the second time.” In the simplest of terms, service recovery is the act of making things right for the customer whenever a service failure is occurs.

Should we aim at 100 percent accuracy in service delivery? Absolutely. Can we always achieve it?

Maybe not. Do customers expect us to do it right at all times? They have a right to do so. But, fortunately, they also appreciate that occasionally things may go amiss despite the best of efforts.

Given that we should all endeavour to give great service the very first time and every time, there are times when things simply don’t work out that way.

Since those who deliver service are fallible humans, they are bound to make mistakes once in a while.

Sometimes, some situations beyond everybody’s control (the weather, for instance) limit the ability of service people to meet up with customer expectations.

At other times, sheer human error or poor attitude crops up. Thus a delivery date may be missed, a bus service may take off late, a package may be delayed or the wrong product may be shipped.

Once the organisation is aware of a service failure – whether it discovers on its own or through a customer complaint – it is the manner of righting the wrong that makes all the difference. An excellent service recovery programme offers an organisation the opportunity to showcase its service orientation to an otherwise angry customer. Service recovery may, in certain situations, involve bending over backward to ensure that the customer is happy once again. In some organisations with excellent service culture, frontline staff are authorized to spend up to a certain amount of money in resolving a customer complaint without recourse to a superior. In others, there is a policy of complaint resolution at first contact. This means that whoever receives a complaint first or gets to know about a matter first, owns the problem and ensures that it is resolved immediately to the customer’s satisfaction.

What’s the payoff for “doing the service very right the second time”? In one word, loyalty. Various studies indicate that when a complaint is satisfactorily resolved, most customers will continue doing business with the organisation and may even become more loyal than they would have been if there had been no problem. This is known as the service recovery paradox. Do you need to disappoint customers sometimes in order to execute an excellent service recovery and earn their loyalty? That’s clearly not the way to go. The fact though is that customers are happy with those who resolve their challenges effectively. They also spread positive word of mouth, which brings in more customers.

But we need to clarify one point. The customer is the ultimate judge of satisfaction. Therefore to make dissatisfied customer happy again, the organisation must tackle the complaint with despatch, courtesy and empathy. If the service recovery process is long-winded and rigorous, the customer may remain dissatisfied after the problem has been resolved. Speed is of the essence.

When we realise that most customers won’t complain then the importance of excellent service recovery cannot be overlooked.

It is important that every serious organisation have a service recovery plan with a simple procedure in place.

The story is popularly told of how Nordstrom, a specialty retailer, accepted returned automobile tyres and refunded the customer the amount he said he bought the goods although the company never sold the tyres.

The company allowed this just to keep a customer happy.

Few companies would go as far as Nordstrom. But every company definitely has a great opportunity to leave lasting impressions on customers through service recovery.

Here are a few suggestions you should consider. *Have a service recovery system in place. *Put your service recovery plan to work once a mistake has been identified, whether the customer is aware or not. *Speed is of the essence. Do it now. *Service recovery is not a cost. It is an investment.

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40 — Vanguard, MONDAY, DECEMBER 2, 2013

Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

he subject of reckless debt accumulation has been discussed in several articles such as “Another Useless Debt Burden” November 2006, “National Assembly Fiddles as Debt Burden Cripples” May 2008, etc (please see w w w. l e s l e b a . c o m ) .

Incidentally, when Nigeria’s Debt Management Office (DMO) was established in 2003, the excruciating existing burden of external debt was over $35bn; domestic debt, however, was still tolerable and manageable, with treasury bills accounting for about 60% at over N800bn, while treasury bonds accounted for about N430 billion.

Ultimately, after our exit from the controversial Paris Club debt with the payment of over $12bn in 2006, our external debt balance tumbled below $4bn. However, external debt has, of today, almost doubled to about $7bn, while domestic debt has multiplied from over N1tn to the current level of about N13tn, without any critical impact on social welfare or infrastructural enhancement.

What, we may ask, was responsible for the rapid accumulation of “useless” domestic debts at atrocious interest rates between 2006 and 2013, during which period our foreign reserves fortuitously also rose beyond $40bn, while CBN inexplicably hoarded hundreds of billions of naira as idle funds?

The following is a summary of an article published in 2005, titled “WILL YOU BORROW N120BN IN SPITE OF IDLE BANK BALANCE OF OVER N4,000BN?” On hindsight eight years later, it seems we may not have learnt any lesson. Please read on:

Paradox of debt accumulation in spite of healthy reserves “In early 2005, the Debt Management Office announced Federal Government’s intention to borrow about N140bn in seven tranches of N20bn each. The purpose of the new wave of borrowing, according to DMO, was “To restructure part of the outstanding 91-day National Treasury Bills into longertenured bonds; provide a benchmark instrument for the pricing of other securities in the capital market, as well as facilitate the development of the bond market in general”.

“We recall that similar bond issues embarked upon by the DMO sometime last year (2004) earned investors an interest rate premium of about 17%. However, a closer examination of the need for fresh government borrowings (with the attendant horrendous interest charges) would show that the nation’s domestic debt burden will inevitably increase in spite of our existing huge idle foreign reserve base of over $32bn. ”The question is why must the DMO convert matured short-term treasury bills to long term debts when in fact, we are adequately equipped to redeem these debts from our existing huge idle reserves? Some analysts warn that our present repugnant burdensome external debt of over $30bn comprises such high service charges as DMO’s present interventions. Even though there is nothing to show for those external debts, we nonetheless allegedly paid over three times the value of

the actual amount borrowed without reducing the principal sum.

This ugly reality may once again materialise in the domestic scene, since there is no guarantee that DMO’s fresh 2-3 year bond will not also be rolled over once again when these loans are eventually due for redemption. ”The second objective of the DMO in offering the current nd 2 FG Bonds for N140bn is to use the adopted interest rate as a benchmark on which

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”The other objective of DMO’s fresh bond issue is to facilitate the development of the bond market in Nigeria; i.e. “to create a deep and ready market for bonds in the Nigerian capital market”.

justify the superficial benefit of developing the bond market, in place of the direct impact of specific project related bonds for provision of verifiable enhanced educational, health and other social infrastructure.”

The above piece was first published in July 2005; since then, the DMO and CBN have rapidly fuelled the debt accumulation process, so that domestic debt now exceeds N13tn ($80bn), while external debt is almost $7bn in 2013.

Inexplicably, CBN & DMO’s debts were incurred regardless of prevailing surplus naira reserves,

particularly from the huge stock of surplus naira continuously mopped up with double digit interest rates and kept as idle funds by the apex bank.

In this manner, in spite of healthy reserves, the DMO and CBN set the pace for institutionalizing the process in which government borrows back its own funds from the banks at oppressive interest rates of up to 17%. The product of this obnoxious strategy is the current domestic debt balance of over N13tn (about $80bn), ironically accumulated simultaneously with rising external reserves above $44bn, which sum ironically earns minimal yields of probably less than 3%.

Yet, paradoxically, government’s voodoo economic and fiscal strategy debars us from accessing these relatively healthy foreign reserves, to redress our high cost oppressive debts.

In the same manner that the DMO commenced operation with conversion of short-term to long term debts, the fashionable official current debt management strategy in 2013 appears to be the conversion of the bloated domestic debt of N13tn to foreign loans, because of the attendant cheaper cost of funds for external loans.

Undoubtedly, a better strategy would be to put a lid on additional loans, while operating an appropriate monetary strategy that would drive down domestic cost of funds.

improve human capacity and make the health sector more resilient.“In addition, the National Primary Healthcare Development Agency

continues to derive funding from my office to fund primary healthcare in Nigeria including immunisation,” it said.

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nce again, observers sadly note that market depth may not bring any direct real positive or tangible impact to most Nigerians; in any event, observers may argue that the estimated heavy cost burden of the N140bn FG Bond 2008 Series does not

The question is why must the DMO convert matured shortterm treasury bills to long term debts when in fact, we are adequately equipped to redeem these debts from our existing huge idle reserves

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other rates in the Nigerian capital market will take a cue. In reality, this could be a possibility, but the truth is that the primary instrument for control of cost of funds is CBN’s Minimum Rediscount Rate. The MRR, currently at 13% (2005), is considered very high in view of MRR of 2-4% in serious minded, progressive and stable economies. Analysts will wonder why government’s risk-free borrowings, which attract an industrially and economally disenabling high interest rate of 17% should be targeted as a benchmark for cost of funds in the capital market.

Business & Economy

FG approves N10bn for Conditional Cash Transfer scheme T

he Federal Government has approved N10 billion to improve the services of the Conditional Cash Transfer (CCT) scheme. This is contained in a statement issued by Mr Desmond Utomwen, the Media and Communication Consultant to the Millennium Development Goals (MDGs) Office in Abuja.

The statement quoted Dr Precious Gbeneol, the Special Assistant to the President on (MDGs), as explaining that the fund was to improve women and children heath care delivery system. It added that the CCT was designed to stimulate demand for C M Y K

healthcare by women and children. According to the statement, the scheme is being scaled up to 30 states with total budgetary provision of N20 billion this year.

“Efforts are being made by initiating Conditional Grants Scheme (CGS) as well as the deployment of groundbreaking mobile money technology to drive the new scale up of CCT. “Therefore, Mr President approved a sum of N10 billion to improve the CCT scheme for the development of health sector ”, it said. It explained that CCT scheme’s objective was to assist the current generation out of poverty

and develop human capital.

The statement said that CGS was designed as a vehicle through which saving made from the Debt Relief would be expended on projects to actualise the MDGs efforts.

It also said that the MDGs’ office was committed to implementing schemes and programmes that would enhance health sector in the country. The statement said the schemes included the Midwives Services Scheme, Community Health Extension Workers Initiative, the Village Health Workers Scheme and Saving One Million Lives Initiative and the UN MDGs Acceleration Framework (MAF).

“These are interventions designed to

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