DECEMBER 10, 2012
From left, Senior Research Fellow, Korea Deposit Insurance Corporation, Mr. Seungkon Oh, Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, Managing Director, Nigeria Deposit Insurance Corporation (NDIC) Mr. Ibrahim Umaru, former Managing Director, NDIC, Mr. Ganiyu Ogunleye and Chief Executive Officer, Deposit Protection Corporation, Zimbabwe and Chairman, Africa Regional Corporation of International Association of Deposit Insurers, Mr. John Chikura during the International Association of Deposit Insurers African Regional Committee Workshop hosted by NDIC held in Lagos. Photo; Sylvester Okoruwa
New electricity tariff drains industries’ profit as operating cost soars by 440% BY FRANKLIN ALLI
I
NDUSTRIES across the country have started feeling the negative impact of the new electricity tariff which they say have been eroding their profit margin as operating cost have risen by 440 percent since the new tariff was introduced in June this year by Nigeria Electricity Regulatory Commission (NERC).
A survey of 138 companies from the six geopolitical zones (Abuja, Bauchi, Calabar, Kaduna, Lagos and Owerri) conducted by NOI Polls Limited for the Nigerian Association of Small and Medium Enterprises (NASME), showed that the new tariff has been having negative effect on their businesses. The survey covered companies operating in the Micro, Small and Medium Enterprises (MSMEs) within various sectors such as manufacturing,
construction, computer sciences and technology, engineering services, hospitality, among others. Sectors surveyed showed that the new electricity tariff is hitting them hard as their operating cost have increased by 440 percent, since the inception of multi-year tariff II (MYTO II) For instance, Alind Nigeria Limited is a private limited company based in Bauchi. The company employs Continues on page 18
140.1
-0.35
2,490.00
-1.00
19.18
-0.18
106.83 -0.20 85.96 -0.30 CURRENCY BUYING CENTRAL DOLLAR 154.76 155.26 STERLING 247.9719 248.7731 EURO 200.1047 200.7512 FRANC 1165.501 166.0357 YEN 1.8791 1.8851 CFA 0.2894 0.2994 WAUA 237.2954 238.062 RENMINBI 24.563 24.6428 RIYA 41.266 41.3994 KRONA 26.8233 26.91 SDR 238.0673 238.8365
SELLING 155.76 249.5742 201.3977 166.5704 1.8912 0.3094 238.8287 24.7226 41.5327 26.9967 239.6056
CBN Exchange rate as at 7/12/20127 C M Y K
18 — Vanguard, MONDAY, DECEMBER 10, 2012
Cover Story
The Basic Guide to Starting your Business Part 1
L-R: Director-General, Lagos Chamber of Commerce and Industry Mr. Muda Yusuf, President of the Chamber Mr. Goodie Ibru, Deputy President Mr. Remi Bello, and Second Deputy President Mr. Knut Ulvmoen, during the Lagos Chamber of Commerce and Industry 124TH Annual General Meeting in Lagos...On Thursday.
New electricity tariff drains industries’ profit as operating cost soars by 440% between 10-49 employees and its annual turnover for the last financial year stood at N10 million. The company manufactures cables and semi-conductors. According to the Managing Director, before June 2012, the company was classified as 03 (industrial) for tariff classification and paid a fixed charge of N43, 471 and an average monthly electricity bill of N110, 000. However, after the introduction of the new electricity tariff in June, 2012, their classification moved to D4, and they now pay a fixed charge of N106, 000 and an average electricity bill of N212, 231, representing 143 percent and 93 percent increases in the fixed charge and average electricity bill respectively. When asked to describe the power supply situation since June 2012, the MD lamented that there has been “No Improvement” and that the new tariff has had a “negative impact” on their business resulting in increased operating cost. As a result, “I have had to lay off several employees to keep the company afloat.” He also added, “We only pay for the hope of having power, and not the power itself.” Similarly, Orfema Pharmaceutical Industries Nigeria limited, a private limited company based in Lagos, which manufactures pharmaceutical products and employs between 10 - 49 employees with turnover for the last financial year between N10 million to N100 million. Due to the nature of the products it manufactures, the CEO noted that they have rotating, cutting and lifting equipment. The company is supplied power from a dedicated transformer fed and C M Y K
,
Continued from page 17
As a result, “I have had to lay off several employees to keep the company afloat.” He also added, “We only pay for the hope of having power, and not the power itself.”
,
operates on a Maximum Demand (MD) Meter. According to the CEO, before June 2012, the company ’s tariff classification was given as D2 (industrial) and they paid an average monthly electricity bill of about N30, 000. However, since June 2012, its tariff classification has moved to D4 and the average monthly electricity bill rose to N160, 000, representing an increase of 433 percent. In the words of the CEO, “PHCN has been unduly unfair to us. We do not even have the light and they bring outrageous bills; it’s so sad.” He further stated that the new tariff has had a “negative effect” on his business because he has had to reduce his staff strength since the operating cost was too high and that they have had to close down production for one week at a point. He suggested a review of the MYTO II policy; because it is wrong for his company to be grouped in the same category (D4) as multinationals like GlaxoSmithKline and Cadbury, “ when we are just an SME,” he added.
Further, Helicon Space Concepts Nigeria Limited, a Private Limited Company based in Owerri, the capital of Imo state, revealed that before June 2012, the company paid an average of N5, 000 monthly on electricity bills; however, their average monthly bill has now gone up to N12, 000 since June 2012, marking a 140 percent increase in what they used to pay. Abuja based Chair Bi Donald Nigeria Limited is a Private Limited Company involved in the manufacturing of furniture and household interior decoration items. The company employs less than 10 poeple and it made less than NI0 million in turnover in the last financial year. Given the nature of their job, they have cutting, welding and spraying machines that require the use of power. According to the MD, the company used to pay N5, 000 monthly on electricity bills before June 2012. However, after June he was surprised to notice that his electricity bill has risen to N9, 000, representing 80 percent increase. He lamented that as a small business, this increase in electricity bill cuts into his profit margin at the end of the month. AAM Plastics Nigeria Limited located in Kaduna, also a Private Limited Company employing between 50 - 199 people. The company manufactures polythene and plastic products and is supplied electricity from a dedicated transformer, with a Maximum Demand (MO) meter which is read monthly by the local PHCN staff. The technical manager stated they experience power cuts for between 20-30 percent of the time and spend Continued on page 19
my heartstrings and I know and am convinced that we can change things for the better, if only people join in the entrepreneurial revolution by becoming their own boss. Growing up for me wasn’t easy and I knew I didn’t want to end up that way, so the moment I discovered an opportunity, I did not hesitate to take advantage of it. I’m desirous for a transformation, which will catapult your life to that place God has predestined for you. Every business starts with an idea, so it is important to have the right kind of idea; this is because the wrong idea can lead to the failure of a business. Don’t forget that the first step is always crucial in the start of any journey in life. It is important that you Brace up for the challenges ahead, and do not let anyone fool you (don’t be deceived) Oil Refinery that you won’t encounter
,
T
he term business denotes a particular trade or profession designed to provide goods and/or services to consumers. And in like vein, any organization which provides these services is also referred to as a ‘Business’. Businesses play a vital role in the life and culture of countries with capitalist and free-market economies. In free-market economies, businesses operate without government control in matters such as pricing and wage levels. While in capitalist economies, private individual and business firms carry on the production and exchange of goods and services through a complex network of prices and markets. The earliest known use of “business” is the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. It is of utmost importance that in starting a business, you need to be guided in your choice of bringing that lifelong dream of yours into fruition. By following the basic guides or rules, you can write a plan adequately that reflects your goals, your personal skills, needs, knowledge, leadership abilities, available resources, level of risk, and the nature of your business factor into the equation (the nature of your business). One of the most important aspects of starting your own business is that it gives you an opportunity to do what you enjoy. When starting a business, certain important points must come to mind your business must fit into your personality, passion, vision, strengths and other strong character traits. Never base your desire to start a business on what a friend has done, this is because the fact that it worked for another doesn’t necessarily mean it will work for you. Bear in mind that entrepreneurship is individualistic, and leadership is indivisible. Let me explain to you, why I decided to write this book. I am constantly pained by the alarming rate of unemployed youths in the society and the poverty level not only in our country, but also all over the world. The situation pulls at
Every business starts with an idea, so it is important to have the right kind of idea; this is because the wrong idea can lead to the failure of a business
,
obstacles. Nevertheless, the determination to succeed and go on will guarantee that you remain on top of your game; this is because the very existence of an idea in your mind shows that you have within and around you, the capacity to turn it into reality. Generally, the size of business you want to embark on has to be thoroughly considered; this is because there is no maximum or minimum length for a business plan.
Vanguard, MONDAY, DECEMBER 10, 2012 — 19
proposed in the Petroleum Industry Bill (PIB) as fair. Alison-Madueke said this at a panel discussion on “PIB and the Future of Nigeria’s Oil Industry ” at the 18th
PIB: FG and oil companies, who holds the ace?
,
N
igeria is a difficult country to understand. It is a country where leaders’ actions are based on greed and personal interest than that of the nation at large. The Petroleum Industry Bill has been in the National Assembly for a while now begging for passage. Legislators are reluctant to pass the bill because most of the oil companies do not favour the legislation as if laws made in the country are to be determined by those who operate in the sector for which the laws are made. Two weeks ago, BP Plc (BP/ ), one of the seven sisters oil companies that rule the oil industry agreed to pay more than $12 billion in government and private party settlements over the 2010 Gulf of Mexico oil spill, yet still faces claims seeking billions of dollars more for the catastrophe. The $4.5 billion agreement resolving federal criminal charges and claims by the Securities and Exchange Commission left the company at risk for as much as $17.6 billion in potential fines from alleged violations of the Clean Water Act, as well as demands by the U.S. and Gulf states for enough money to restore the region’s coastline and waters to their condition before the spill. BP is paying for damages it caused based on existing laws in the US and the Gulf State of Mexico. BP did not make the laws; still, BP was banned by the US government from any government contract until it is able to show that it can do clean business. Here in Nigeria, Shell and others have done worst spill in the NigerDelta but go around talking tough as if they are the landlords on the land they operate. Shamefully, Nigeria seems to be begging these oil companies to allow it pass the PIB bill. Funny enough, Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, in Abuja described the fiscal terms
We feel that the fiscal terms are fair but we will continue discussions with our partners, looking for a way in which both sides of the scale can go forward
Nigeria Economic Summit. She said that Nigeria still remained one of the most attractive countries in terms of fiscal regime or “government take’’. The minister said that the total government share of oil
,
revenues after all taxes and royalties was 73 percent, up from 61 percent in current deals with oil majors. AlisonMadueke said that Nigeria was not alone in the tightening of the fiscal terms. She said the goal was to achieve a “fair
balance between government and contractor share to ensure that risks do not outweigh rewards.” Hear what she said “We feel that the fiscal terms are fair but we will continue discussions with our partners, looking for a way in which both sides of the scale can go forward. Also, all cost based incentives have now been replaced with production based incentives, because government revenues come from production and not from cost.” Does the government have to beg for it to pass a law in its own land and resources? If the oil companies are not comfortable with the law which is in line with what is happening globally, they have
alternative choice. Many of them have been indulging in subtle threat of divesting from the country. In this day and time when China and India are looking for where to put their money, government should be courageous enough to call there bluff. Nigeria is in this state today because the country has failed to diversify its economic base. If the economy was diversified and government revenue from other sources were as much as it gets from oil, it will not subject the nation to the current ridicule. The multinationals are well aware that they have been feeding fat on Nigeria for the mere fact that current deep water terms were negotiated in 1993 when oil prices were just 20 dollars a barrel. Section 16 of the Deep Offshore Act prescribes that changes be made to this particular fiscal regime to restore benefits to the government commensurate with increased oil prices, once oil prices have exceeded 20 dollars per barrel in real terms. The Act also prescribes that changes be made 15 years after the commencement of the Deep Offshore Act. This, therefore, imposes stricter discipline on cost escalations and deincentives gold platting. It is exactly 19 years since that negotiation was made. Nigeria must go ahead with the legislation and spell out clearly the term of engagement and total deregulation of the oil sector.
Cover Cont. New electricity tariff drains industries’ profit as operating cost soars by 440%
,
between N250, 000 to N500, 000 to power their diesel generator. The survey revealed that before June 2012, the company paid a fixed charge of N5, 000 and an average monthly electricity bill of about N850, 000. However, since June 2012, their fixed charge has risen sharply by 2680 percent to N139, 000 and their average electricity bill rose by 95 percent to N1.66 million. Also, Flo-Gee Enterprises, a Private Limited Company
located in Calabar, the capital of Cross River State employs between 10 - 49 poeple and has an annual turnover below NI0 million in the last financial year. This company is involved in producing confectioneries such as cakes, bread and biscuits. Its major equipment is a large electric baking oven, which the company purchased less than five years ago. The company is supplied electricity from a supply drop from an 11KV line, with a three phase meter; yet they suffer power cuts more than 40 percent of the time, and
The company is supplied electricity from a supply drop from an 11KV line, with a three phase meter; yet they suffer power cuts more than 40 percent of the time
,
have to augment their power source with a diesel powered generator on which they spend between N50, 000 -to NI00,
000 monthly. The survey found that before June 2012, the company paid an average of N3, 500 monthly on electricity bills. However, after June, their average electricity bill went up to N8, 000, representing a 129 percent increase in monthly tariff. To make things worse, the manager stated that there has been no improvement in electricity supply since June 2012 and that the new tariff has had a negative impact on their business because they have spent more on alternative
power supply this year than they have ever spent in the almost five years of operating the business. Eke Ubiji, Executive Secretary of NASME, disclosed that the Association decided to carry out the survey following several complaints from its members about the cost implications of the new MYTOII policy introduced by NERC in June 2012, which they claimed constitutes a burden on their businesses. Continued on page 23 C M Y K
20 — Vanguard, MONDAY, DECEMBER 10, 2012
Business & Economy BRIEFS LIRS seals six firms over nonremittance of workers’ income tax he Lagos State Internal Revenue Service (LIRS) says it has sealed six companies for allegedly defaulting in remitting taxes to the tune of N17.9 million. Mrs Folasade CokerAfolayan, the Head of its Enforcement Unit, told the News Agency of Nigeria (NAN) in Lagos on Thursday that the companies failed to remit the workers’ income taxes. She said that the companies failed to remit the taxes in the last six years. Coker-Afolayan said that the companies had been warned not to reopen until they had settled the tax liabilities with the state government. “For now, these properties belong to the Lagos State Government until they pay their tax liabilities to the government. It is a criminal offence to break government’s seal,” CokerAfolayan said. She said that tax remittance was not a necessity, but a civic responsibility of everyone, adding that prompt remittance of taxes would enable government to function effectively.
T
Infrastructure Bank authorises 2 companies to offer 1.5b shares he Infrastructure Bank (TIB) Plc (TIB) says it has authorised two companies to offer 1.5 billion ordinary shares of one naira each at one naira per share to existing shareholders. The Chairman of the Board of the bank, Malam Lamis Dikko, told management and members of the board that the two companies were APT Securities and Funds Ltd and WSTC Financial Servies Ltd, all based in Lagos. Dikko said that the companies, to be addressed as issuing houses, had agreed to do so. The chairman also said that the bank had authorised the companies to offer 3.1 billion ordinary shares at one naira each. “ The bank currently authorised a share capital of the company of N3.1 billion, comprising 3.1 billion ordinary shares of N1.00 each Dikko, however did not disclose the initial share capital of the bank.
NAICOM urges MDAs to settle debts to insurance firms C ommissioner for Insurance National I n s u r a n c e Commission (NAICOM), Mr Fola Daniel, has appealed to government agencies to settle unpaid premium to insurance companies. Declaring open a one-day workshop on the implementation of “No premium, No cover” policy, Daniel said delayed and unpaid insurance premium are driving the industry into “extinction.” He said “The vexed issue of delayed or unpaid insurance premium has now attained an alarming crescendo, threatening to drive the industry into extinction if not curbed. Most insurance companies make huge provisions for outstanding premiums in their books on an annual basis, which invariably affects their bottom line and their inability to make profit, pay dividends and attract investment to enable growth." The Commissioner identified government Ministries, Department and Agencies (MDAs) as the “biggest debtors” of insurance companies. Although he did not provide the amount owed by the MDAs, he alleged that many government agencies, with budgetary provision for insurance, delay payments of premium to insurance companies for months. He added that in some cases the fund was re-deployed to meet other needs of the MDAs,
Group photograph of participants at the GTBank's 2012 Annual Course for reporters held at Park Plaza, Riverbank, Albert Embankment, London
which is in clear breach of the Insurance Act 2003. Daniel also stressed the need for MDAs to make adequate provisions in their budget for insurance of strategic government assets and property. He told participants at the
workshop, mainly insurance desk officers in government establishments, that the policy of “No premium, No cover” was not a creation of the Commission. “It is indeed a statutory provision in the Insurance Act of 2003 which is obligatory on NAICOM to
ensure its implementation.” He said desk officers would be culpable if they failed to draw the attention of their respective organisations on the need to ensure adequate insurance protection for strategic government assets.
World Bank pledges to assist Nigeria strengthen statistical system
T
A
Statistician, Development Data Group of the World Bank Mr Alain Gaugris, has said the bank would assist Nigeria to strengthen its statistical system. At a twoday meeting of the National Consultative Committee on Statistics (NCCS) held in Calabar, he said the bank would position the country’s statistical system to fully contribute to the transformation agenda through evidenced-based policy formulation. “The bank is actively involved in statistical development in Nigeria, mainly through a grant called Statistics for Results Facility (SRF). The US$10 million grant project focuses on capacity building at the
federal level for National Bureau of Statistics (NBS) and National Population Commission (NPC),” Gaugris said The statistician said the project would also focus on capacity building at the six pilot states in the six geopolitical zones of the country. According to him, the pilot states are Anambra, Bauchi, Edo, Kaduna, Niger and Ondo. Gaugris said that the objective of the three-year project was to initiate the implementation of the National Strategy for the Development of Statistics (NSDS) by producing reliable statistics in participating states. Gaugris said the projects were already yielding tangible results, as the NPC and Central Bank of Nigeria (CBN) websites had been
revamped as well as the establishment of a state of the art data portal. He urged the federal and state governments, media, civil society and advocacy groups to play their roles toward the development of the National Statistical System (NSS). Governor Liyel Imoke of Cross River, who declared the meeting opened, urged members of the committee to pay attention to the funding of statistical production at the federal, state and local government levels. Imoke who was represented by his Economic Adviser, Prof. Nyem Ayara, stressed the need for NCCS to strengthen statistical systems at all levels and urged them to explore how the private sector would be
more effectively involved in statistical production and utilisation. “I call on this meeting to examine creative funding sources for statistical development, improvement of data quality, standardisation of statistical units of measurement, regularity of data and quality of trained statistical personnel,” he said. Dr Yemi Kale, the StatisticianGeneral of the Federation called on relevant stakeholders to be committed to statistical development. The statistician-general said that the availability of adequate and quality statistics would also ensure the monitoring and evaluation of government policies and programmes to achieve developmental goals.
C M Y K
Vanguard, MONDAY, DECEMBER 10, 2012 — 21
F/P Advert
C M Y K
22 — Vanguard, MONDAY, DECEMBER 10, 2012
Banking & Finance BRIEF Mainstreet Bank rewards excellence, promotes 150 staff
M
ainstreet bank has announced the promotion of 150 deserving members of staff. A statement released by the Bank stated that the promotion exercise was carried out in line with the commitment made by the management following the recently concluded appraisals. The promotion exercise which is the first by the Bank since it commenced operations on August 5, 2011 is aimed at boosting the morale of its workforce and will complement the various initiatives that the Bank has embarked on to ensure the continued delivery of exceptional customer service to customers. Announcing the promotions, Faith TuedorMatthews, the Group Managing Director and Chief Executive Officer, noted that, “Our people are the key drivers of success, therefore as an organization we will provide an enabling environment for staff to thrive and excel on a continuous basis. We will also continue to reward superior performance.” “This is yet another demonstration of our resolve to continually reward sterling performance and encourage us to achieve exceptional results; whilst providing staff with the opportunity to reach the peak of their careers.” She enjoined all staff to continue putting in their best at all times. The Bank is committed to having a cohesive work force and has kept the communications line open for our staff. We are very clear on our next steps and are focused on ensuring that our people, processes and systems are in tune with our growth objectives. We are raising the quality of our service delivery to a level that will make every service experience with us memorable one to our existing and prospective customers. Our target is to be a reference point in customer service delivery. A solid foundation is being laid for the attainment of this overarching goal. Tu e d o r - M a t t h e w s emphasized that the transformation plan of the Bank is anchored on productivity and building a fully motivated workforce positioned for growth. Mainstreet bank has achieved significant improvements largely driven C M Y K
Former Minister of Information, Chief Alex Akinyele (left) presenting the award for ‘Outstanding CEO of the Year’ to its winner, Managing Director, Fidson Healthcare Plc, Dr Fidelis Ayebae (right)during the Pearl Awards ceremony held in Lagos recently.
Cashless policy: LCCI advocates zero account opening balances BY NAOMI UZOR
L
agos Chamber of Commerce and Industry (LCCI) has advocated for the opening of accounts with zero balances, saying it will boost the Central Bank of Nigeria’s financial inclusion strategy. The LCCI’s President, Mr.
Goodie Ibru, while reviewing the recommendations made from the post field survey of the cashless policy from Lagos also challenged the Central Bank of Nigeria (CBN) to push for more stringent laws and enforcement against financial crimes as well as intensify awareness campaign for the actualization of the new
cashless policy to work in Nigeria. He also called on the apex bank to ensure that Government initiate policy that would reduce the import duty and other charges for importing machines as incentives to speed up the spread of the (Point of sales) facilities in Nigeria. ” We challenged the CBN
to push for more stringent laws and enforcement against financial crimes as well as intensify awareness campaign with emphasis on the usage benefits of the facility so as to encourage increased usage for the actualization of the new cashless policy to work in Nigeria. We also call on CBN to encourage banks to introduce opening of accounts with zero balances for customers to encourage the non-banked population to have/use Automated Teller Machine cards which will be used to further the implementation of the cashless policy” he said. According to him, the CBN should put in place for banks, technicians to be trained on how to manage/repair the ATM, and they should be stationed at different locations for easy accessibility. “The phone numbers of these technicians should be given to the outlets where the machines are installed. Workshop/seminars should be organized by the CBN for trade/business associations to give them better orientation about the policy” he stated He said it is pertinent to note that as the phenomenon of electronic platforms continue to gain acceptance and wider applications in our social and economic lives, the e-payment component becomes more critical to the success of e-shopping, eticketing, e-governance, ebook publishing, and lots more.
Global finance to experience reform in 2013 - EIU survey BY PROVIDENCE OBUH
G
lobal finance will continue to haul the heavy weight of reforms in 2013 and beyond says the Economist Intelligent Unit (EIU) survey report. According to the report titled “Industries in 2013,” 405 executives were surveyed in November 2012 on their expectations for businesses conditions in 2013. The survey sample was global, with 46 per cent of respondents based in Europe, 25 per cent in Asia, 10 per cent from the Middle East and Africa and 5 per cent from Latin America,
also, 37 per cent of the respondents are relatively senior holders of C-suite positions while 7 per cent are board members who work in organizations of varying sizes, with 53 per cent earning annual revenue of US$500 million or more. The report revealed that the Basel III standards, launched in 2013 is to force global banks to hold more base capital, and better forms of capital such as equity and retained earnings. “This should make lenders more resilient the next time a crisis hits. “In the short term, however, raising the extra capital will hurt, few investors want to buy bank shares these days, so most lenders will hold on to any profits (instead of sharing them with investors) or sell off assets such as loans,
properties and entire business units and this pain will remain sharpest in Europe, and the US to a lesser extent. “Banks in emerging markets are little affected since most already hold capital of the types and quantities required by Basel III. “Other reforms are less sweeping but will also bite as most developed countries want to move the lucrative business of over-the-counter derivatives onto lessprofitable clearing platforms that offer greater transparency,” the reported stated, noting that a lot of the European nations plan to impose financial-transactions taxes and tighten rules about the balance sheets of insurance companies while the US wants to bar deposittaking banks from investing
in private equity and hedge funds. Accordingly, the EIU is of the view that finance hurt by the two-track course of the world economy will remain largely unchanged in 2013, saying that the challenge of finance is overwhelmingly concentrated in developed countries. “According to our forecasts, rich countries of the Organisation for Economic Co-operation and Development (OECD) will grow by a paltry 1.4 per cent, while non-OECD countries will expand by 5.8 per cent, these markets will hold 77 per cent of global bank assets in 2013, falling only to 76 per cent by 2016. These same developed countries take in 85 per cent of insurance premiums and hold over 90 per cent of investible assets.
Vanguard, MONDAY, DECEMBER 10, 2012 — 23
Corporate Finance
SEC recommends listing of privatised power companies By BABAJIDE KOMOLAFE
S
ecurities and Exchange Commission (SEC) has recommended to the federal government that the privatized power companies be made to list their shares on the Nigeria Stock Exchange. Director-General, SEC, Ms. Arumah Oteh said this at the 18th Nigeria Economic Summit, during the financial regulators forum. She said the listing of the companies will allow Nigerians to participate in the wealth created by the companies and also enhance corporate governance in the management of their affairs. She stated this while highlighting efforts of the Commission to encourage telecommunication companies and SMEs to lists on the Exchange. She said, “those in Stock Exchange and SEC believes that it makes great business sense for large companies to list, it enhances their brand and it creates effrontery for their product and the example that I like to give is whenever people threatens that they will blow up the base station of a telecoms company, if someone owns the share of that company, that person could actually decide to protect it. So we believe that there is great business reason why large companies telecoms, oil and gas and others companies should list. To us it is unfortunate that as we stand today the stock market basically represent 17 per cent of the economy but we feel that some of what is been done today in agriculture should change that. “In agriculture we have a few
listed companies that focus on agriculture, some of them are conglomerates like PZ and Nestle and others but two specialized companies come to mind Presco and Okomo and they have done very well this year in terms of their performance. So there are clearly good opportunities for those who are building agro based system to come to the market. When I listened to the agriculture Minister talk about what happened in cassava, that we are exporting them for eternal to China, those companies should be queuing up asking us about how to grow their business because I am sure it is not just China looking for eternal from Nigeria. When he mentioned that within one year we have thirteen rice mill in Nigeria and that his plan is that by January 2015 we would have 100 rice mill, we expect that
those companies will seek medium to long term finance in the bond market or the capital market. “We also have been actively proposing to the federal government, that as we privatize power, that those companies should list as quickly as possible on the stock exchange for two reasons; I think some of what we have learnt from telecoms companies not listing early enough, should not happened with the power companies. Part of financial inclusion is democratizing participation in the capital market so that more Nigerians can create wealth. But we think even more important is the issue corporate governance, there is clearly more transparent and accountability when companies are listed on the Nigerian stock exchange.”
NSE value rises by N56bn on blue chip coys’ gains By CHINEDU IBEABUCHI
E
quities value on the Nigerian Stock Exchange, NSE, appreciated by N56 billion last week. This was occasioned by price gain on the shares of highly capitalised companies. Specifically, the key market indices recorded 0.67 per cent gain each. The market capitalisation gained N56 billion to close at N8.522 trillion from N8.466 trillion; while the all share index gained 177.28 points to close at 26,671.72 points from 26,494.44 points. A review of the equity price movements indicated that
thirty five equities gained while thirty-one equities recorded price declines and prices of one hundred and thirty-two equities remained constant. When compared with the preceding week, thirty equities gained while thirty four equities recorded price declines and prices of one hundred and thirty-four equities remained constant. Guinness Nigeria Plc led on the gainers’ table appreciating by N10.91 to close at N241.19 per share from N230.19; next was Nestle Nigeria Plc. which gained N9.94 to close at N660.05 per share, while Nigerian Breweries Plc rose by N3.27
to close at N143.55 per share, among others. Meanwhile, Mobil Oil Nigeria Plc led on the losers’ table dipping by N5.75 to close at N109.25 per share from N115.00 per share; next was Total Nigeria Plc losing N3.00 to close at N121.68 per share, while MRS Oil Nigeria Plc dropped N1.31 to close at N25.01 per share, among others. Trading results show that a turnover of 1.144 billion shares worth N 11.239 billion in 18,947 deals was recorded in the week under review in contrast to a total of 1.216 billion shares valued at N8.886 billion that exchanged
hands in 18,902 deals the penultimate week. The Financial Services sector (measured by turnover volume) accounted for 872.712 million shares valued at N6.803 billion traded in 11,398 deals. The Consumer Goods sector followed with 75.609 million shares valued at N3.117 billion traded in 3,812 deals. The Banking subsector of the Financial Services sector was the most active during the week (measured by turnover volume); with 645.733 million shares worth N5.555 billion exchanged hands by investors in 8,257 deals.
Cover Cont. New electricity tariff drains industries’ profit as operating cost soars by 440% He said that against this background, NASME invited an independent consultant, NOI polls limited, to conduct an assessment of the impact of MYTO II from November th th 6 to 12 , 2012. A total of 138 enterprise owners were interviewed and 127 interviews were completed. Interviews were spread across the six geo political zone in Nigeria. “MSMEs have a very negative perception about the MYTO II tariff since its introduction. This arises from the fact that they are experiencing declining profit margins which they attributed to a rise in their total
,
Continued from page 19
NASME is willing to partner with NERC to mutually define a tariff regime that will encourage stakeholder interest
,
operating costs.” Erratic power supply is a major issue faced by MSMEs due to the fact that there are no visible power improvements. This has led to an increased use of alternative power supply which has again led to
increased operating cost. NASME is willing to partner with NERC to mutually define a tariff regime that will encourage stakeholder interest in the Nigeria electricity sector as well as ease pressure on MSMEs. Operators, he said have also proposed that NERC should provide clarity on MYTO II and that NERC in partnership with NASME should endeavour to create enlightenment programmes about the MYTO II price regime, its implication for businesses and its overall objective. *We recommend to NERC that before such policy is implemented, it should carry out a Regulatory Impact Assessment (RIA) on all
categories of electricity consumers to have a feel of the impact on such policy. *There is negative perception about the tariffs and this has to be addressed to ensure a successful price regime. *NERC should instruct the electricity distribution companies to inform/educate customer on their customer classification for the purpose of billing them for electricity. Template of bill should be unified across all DISCOs including fixed charge, tariff classification, name and address of customer. This should help tackle the issue of transparency. *Elimination of fixed charge and replacement with unit
charge. This will help SMEs who produce seasonally and encourage energy conservation, where an SME only pay for what it consumes. Issue of stability of power supply though not NERC’s core business should also be addressed in order to forestall further resistance to the MYTO II price regime as the perception about power is very negative given the increasing cost to business on the use of alternative power supply.
C M Y K
24 — Vanguard, MONDAY, DECEMBER 10, 2012
Housing Finance BRIEFS Plateau State signs N4.5bn contract for new govt house Plans by the Plateau State government to add an additional Government’s House has yielded result as it has entered into a N 4.5 billion contract with a construction firm for a befitting modern Government House construction about five kilometers from the present one. As a result, the current one use in Rayfiled will be converted to a presidential lodge, the government said. At a brief but colourful ceremony at the Rayfield Government House, the Secretary to the State Government, Prof Shedrack Best signed the contract on behalf of the state Governor Jonah Jang with Mr. Noca Giacofo, Director of Eagle construction limited standing in for the company. The SSG disclosed that the Presidential Lodge was converted to the present government House and the Tunde Wada Government lodge remains as such, saying the decision become necessary to meet the challenges of modernity.
Foreign buyers scooping up U.S. homes- Les Christie
I
nternational purchases of American homes are ramping up, and a new Senate bill designed to boost the ailing real-estate market would encourage globetrotting investors to buy even more. The bill, co-sponsored by Charles Schumer (D-N.Y.) and Mike Lee (R.-Utah) would grant a U.S. visa to international investors who agree to spend at least $500,000 on residential real estate here. If passed, the legislation could add to a surge in homebuying by international purchasers over the past year or two that’s already given some local U.S. markets a welcome boost. Growing international interest Foreigners spent $82 billion buying up U.S. homes in the 12 months ended in March, up 24% from a year earlier, according to the National Association of Realtors (NAR). That represents 8% of total U.S. sales. C M Y K
T
he Minister of Federal Capital Territory (FCT), Senator Bala Mohammed, has insisted that 31 illegally built estates in Abuja would be demolished. This was disclosed to the Senate Committee on the FCT during the 2013 budget defense. He stated that the ministry had the backing of the nation’s laws to demolish illegal estates. He said this was aimed at putting a stop to the impunity of developers in the capital territory. So far, the FCT authority had demolished over 500 housing units since September amidst loud protest by those affected. “We cannot allow a situation or exercise of impunity or lawlessness; we are not going to condone this for any reason. You are putting a lot of sentiments as a politician, I am a civil servant; I am working according to the law. These people have been told not to do it. Nigerians are gullible. “Coming back to the 31 estates unfortunately, when the FCT development programme was put in place, there was no guideline to have a timeline for deliveryfor infrastructure and prototype ,for people to know that this is what we are going to get within certain period”. He pointed out that the Federal Capital Development Authority (FCDA) has a law and Abuja
L-r; Mr Adigwe Ifechukwude, head,marketing(land matters),pentagon real estate investment ltd; mr. Ibeziako tony oseloka,a subscriber;& pastor. Emeka Okoye,managing director during the presentation of land title documents to the allottees of cedar garden,agbara,ogun state recently.
FCT Minister insists on demolshing 31 we will bring housing for housing estates in Abuja Nigerians who cannot afford BY MIKE EFFIONG master plan is not to be compromised. “I have a law on demolishing. The law I said I don’t have is the one the Chairman asked on the issue of parking. But for demolition I have a law and I don’t even
have to interfere with development control law under the land use Act.” On affordable housing, “we are coming with American investors as well as our own Abuja Property Development Company. We are going to build 1,000 hectares, so that
them in high brow area. We want to build structural and affordable houses. Those whose building will be demolished we will make sure that there are alternatives for them”. He added that there is no law on illegal parking in the FCT, emphasizing that the decision was not administratively.
FG to provide 4,000 housing units in Abuja T
he Federal Government has said it will build 4,000 housing units at Ushafa in Bwari Area Council of the Federal Capital Territory (FCT), stressing that this will provide accommodation for Federal Capital Territory Administration (FCTA) workers under National Housing Fund Scheme. Minister of State for FCT, Ms. Olujomke Akinjide, disclosed this, while addressing journalists, saying that the effort was part of the government’s commitment to provide affordable accommodation for the people. “The present administration is resolutely committed to the provision of housing to its citizenry. The importance of shelter to human development cannot be overemphasized. In hierarchy of needs, shelter is next to food. Government is committed to bridge the housing deficit gap in the country and this effort is part of the whole package of government in housing delivery sector”. Mr.Gimba Y. Kumo, Managing Director, Federal Mortgage Bank of Nigeria (FMBN) stressed that, the huge housing deficit in Nigeria and FCT in particular.
He said “Given the housing deficit currently existing in the country and the fact that the FCT and its environs are facing enormous pressure due to high demands for affordable housing, it is apparent that institutions such as FMBN are heavily relied upon to provide the levels of financing required to meet these demands”. As part of the moves to fulfill its mandate in housing sector,
Kumo said that within this year alone, the bank launched two new products with a view to expand and improve its services through National Housing Fund Scheme. He explained that the two products are FMBN Informal sector Co-operative Loan and NHF eCollection platform. Emphasizing more on these products, he added that in the past 12 months FMBN has launched two new product
geared at expanding and improving its services through the National Housing Fund Scheme. The first product is FMBN Informal sector Co-operative Society Loan Scheme aimed at expanding Mortgage loans to the Informal sector such as farmers, artisans and so on using housing cooperative as mechanism for mobilization and integration.
Lagos reviews land documentation regulations
L
agos State government has unveiled new Land Use Act Title Documentation Regulations, which permits prospective applicants who bought land from the customary owners, to obtain Governor’s consent instead of private certificate of occupancy (PC of O). The new law titled: “Land Use Act Title Documentation Regulations, 2012”, covered by Section 34 of the Land Use Act was signed by the Lagos State Gover nor, Mr. Babatunde Raji Fashola. A press statement signed by Alhaji Moshood Adebisi, an official in Land Bureau,
explained that applicants seeking to register their interest in respect of land bought from vendors and in possession of such land before March 29th 1978, only need Governor’s Consent and not (PCof O)”. According to the statement, “Instead of Private Certificate of Occupancy, applicants who bought land from such vendors only need to obtain Governor ’s Consent to the transfers/transaction in line with the said new regulations”. He hinted that applicants are expected to submit application form obtained
from Lands Bureau Registry, Land Information Certificate, Transfer of Interest Document and should be accompanied with the purchase receipt showing the actual date of purchase, survey plan, statutory fees among other things, The new regulation also frowned at applicant procuring a backdated receipt, as anyone who engages in such act shall be prosecuted, the statement added.
Vanguard, MONDAY, DECEMBER 10, 2012 — 25
F/P Advert
C M Y K
26 — Vanguard, MONDAY, DECEMBER 10, 2012
Insurance BRIEF Prime Investment Brokers regains operational license
T
he National Insurance Commission, NAICOM, has lifted the suspension placed on the Akure-based insurance brokers, Prime Investment Insurance Brokers Limited. In a statement, NAICOM said that the move is sequel to the satisfactory conduct of the broker during the period of the suspension and the fact that the company has purged itself of all the infractions that necessitated the suspension of its license. The company was suspended from doing business as insurance broker with effect from June 14, 2012 following the unprofessional manner with which the firm handled the Ondo State Government property insurance account.
Ex NAICO President Bags CIIN Associate
T
he immediate past President of the National Association of Insurance Correspondents, NAICO, and Insurance Editor of THISDAY Newspaper, Mr. Nnamdi Duru has bagged the Associateship of the Chartered Insurance Institute of Nigeria (CIIN). He is the first serving Journalist in the country to pass the three stages of the Institute’s professional examinations and qualify as a chartered insurance professional. Born June 24, 1969 in Ehime Mbano Local Government of Imo State, Duru Attended Community School, Umunakanu Ama in Mbano, Imo State and Orile Agege Community High School, in Lagos. He holds a 1992 Bachelors degree in Banking/ Finance from the Abia State University and bagged an MBA in Management from Imo State University in 2005. He also holds a Diploma in Computer Studies from the Lagos City Computer College (LCCI), Ikeja. Duru worked with Maldesa Foods as Sales and Account Executive between 1995 and 1999 before he crossed over to THISDAY Newspaper as Reporter and was assigned to cover the Labour and Industrial Relations. He was later elevated to the position of Correspondent and Head of Insurance and Pension Desk in the organisation in 2003, a position he occupies till date. Taxation was later added into his
T
he Nigerian Insurers Association, NIA, said it will engage the Presidency and the National Assembly on the need to put up laws that will address the various challenges confronting the insurance industry. Chairman of NIA, Mr. Remi Olowude, who said this at his investiture ceremony in Lagos, said the NIA intends to initiate interactive sessions with the appropriate committees or organs of the two chambers of the National Assembly to discuss issues such as restrictive laws on insurance practice, multiple taxation, insurance awareness and penetration, development of oil and gas industry among other issues. He said, the NIA will organise annual or bi-annual insurance seminars for judges and the leadership of the Nigerian Bar Association so as to strengthen its relationships with the different organs of the Judiciary. According to Olowude, the seminars will focus on developments in insurance law in Nigeria, and ensure that the judiciary, legal profession, the regulators, and practitioners in the insurance industry as well as the media have a mutual understanding of insurance law and practice. “The more people understand the law, the less the courts are inundated with avoidable suits,” he stated. He further stated that it has become aware of the needs to take deliberate steps towards closer interaction and strategic partnership with all stakeholders, particularly the major three arms of Government. He disclosed that the NIA
L- R, Prof. Ben Oghojafor, Dean Faculty of Business Admin of the University of Lagos; Prof. Babajide Alo, Deputy Vice Chancelor of the University; Mr. Ken Aghoghovbi, Deputy Managing Director of Africa Reinsurance Corporation and his wife, Dr Titilayo Aghoghovbia at a dinner organised by Unilag in honour of Mr. aghoghovbia for his contributions towards the development of the Nigerian insurance industry in Lagos
NIA to engage presidency, NASS over insurance sector growth BY RITA OBODOECHINA plans to meet with the presidency to discuss issues bordering on the key roles of the insurance industry in the transformation of the Nigerian economy. He said, “The Governing Council will consider seeking an audience with the Presidency to table issues such as the key roles of insurance to the socioeconomic growth and
development of the nation; how the insurance industry and the government can collaborate in areas of poverty alleviation; the need to give the industry the opportunity to contribute to the formulation of certain government policies; insurance industry representation in appropriate government committees; among others. “Closely related to this is the need to restructure and strengthen the NIA secretariat
Unethical practices: CIIN threatens withdrawal of certificates He said: “Permit me to industry post consolidation By ROSEAMRY ONUOHA
T
he Chartered Insurance Institute of Nigeria, CIIN, has threatened to withdraw the certificates of any member who engages in unethical practices. President of the CIIN, Mr. Wole Adetimehin, who disclosed this at the Institute’s 2012 graduation and fellowship award ceremony in Lagos, said the institute reserves the right to withdraw its certificate from any holder, if it discovers any breach of the examination process, adding that further reason for such withdrawal of certificates may emanate from acts unbecoming of a holder of the Institute’s professional qualification.
reiterate the policy of Council in regarding all Certificates issued by the Institute as the Institute’s property which could be withdrawn from the holders if the Institute has good reasons to do so. “Let me state categorically that the Institute reserves the right to withdraw its certificate from any holder, if it discovers any breach of the examination process. A further reason for such withdrawal of certificates may emanate from acts unbecoming of a holder of the Institute’s professional qualification.” He noted that the institute would continually strengthen its examination system through regular review of the syllabus and examination structure, stressing that the institute is conscious of the
challenges which came with new and complex human capital needs. “The challenges facing the industry today not only require a fresh impetus in human capital development but also a renewed vigour and approach to skills recreation in order to equip practitioners for the huge tasks of managing the current realities in the business landscape,” he said. He noted that the attainment of professional qualification should not be seen as an end in itself, but as a means to an end. Therefore it behoves all holders of professional qualifications to be mindful of the efficacy of Continuous Professional Development (CPD).
for effective public sector liaison and monitoring of the political and legal environment as it affects insurance.” Olowude maintained that the NIA will strengthen its partnership with other members of the organised private sector, saying it will increase its participation and representation in the activities and deliberations of the Nigerian Association of Chambers of Commerce, Industry, Manufacturing and Agriculture, the Chambers of Commerce and Industry in Lagos, Kaduna, Abuja and Port Harcourt, and the Nigeria Employers Consultative Association. To reduce the burden of marine insurance claims, he said, “The NIA will also support the activities of the Cargo Defence Fund, an offshoot of the Nigerian Shippers Council (NSC). We shall collaborate with the NSC to introduce Protection and Indemnity insurance clubs, to monitor developments in maritime law on carriage of goods by sea and related international conventions. “It is my conviction that this kind of collaboration will help to develop marine insurance generally by ensuring full protection of maritime risks, backed by authentic and strong reinsurance cover to lighten the burden of marine insurance claims.”
Vanguard, MONDAY, DECEMBER 10, 2012 — 27
, , F/P Advert
28 —Vanguard,
Interview
S
ince Mobile Money took centre stage in Nigeria with the licensing of operators by Central Bank of Nigeria (CBN), the controversy has been whether it would not have been appropriate for the apex bank to license mobile operators who own the platform used for the transactions. But CBN stood its ground saying that it prefers to license banks. However, some of the operators like MTN have found a way around the situation, by partnering the major mobile money licensees. This has led to massive campaigns which confuses people on who actually is the real mobile money operator. Financial Vanguard recently engaged the General Manager, Business Development, Sales and Distribution department of MTN Nigeria, Mr Richard Iweanoge, who cleared the air on MTN’s role in mobile money as well as other development around mobile money in Nigeria. Excerpts…. A recent newspaper report revealed that the mobile money market in Nigeria has the capacity for N1.17 trillion worth of transactions in six months if the current number of about 1000 agents can be raised to 250,000 agents. What is your take on this? Let me use an analogy to answer that question, if you want to buy MTN airtime anywhere in this country, you are likely going to find someone within 100 meters who is offering to sell it, either on a street or anywhere. Now, how did that succeed? Because we created a very robust channel of distribution where people saw the business opportunity and actually keyed into it and invested into becoming MTN distributors, sub distributors and retailers. The reason I am using that analogy is that the team here in sales and distribution for MTN is the team that made that happen and it is the same team that is getting a robust channel of distribution for mobile money. Even if we just piggy-back on the current channel of distribution we have which is the retailers, the Sub distributors, clearly we will have more than that 250,000 distribution points and that is our goal. We think it’s a matter of time, as people understand the business model, more and more people will come. Within one year we think we will surpass the 250,000 points of service if we keep going at the rate we have been going. It is really replicating what
we already have and getting people we already have to participate in mobile money. So it does not take much to educate them and show them the business model and the opportunities. So if you sell airtime, nothing stops you from also participating in mobile money provided you have the right documentation that we can register you with. That also brings us to the million dollar question. Is MTN a mobile money operator? We are providing mobile money services to customers in partnership with mobile money license holders. Like the name implies mobile money clearly means you need to transact with your mobile phone. We are the service providers on mobile phones. We don’t have a license but we are working with partners who have license to provide the service to the consumers. Even with the license they still need a mobile partner technically to provide the service. So what we have done in this case is to partner with Fortis bank and Stanbic IBTC bank that are licensed by CBN. We will still partner with more others to provide the service to customers.
I
n this partnership who has the greater stake? It depends on what you mean by the greater stake. It is the service we want to provide to our customers. The licensee has a need to reach our customers so we give him access to our customers. It is really not about who has the
Mr Richard Iweanoge...You know most subscribers on the MTN network are registered now, so there is requires those things
Nigeria may soon out-st in mobile money service greater stake, it is about the customer. It is about financial inclusion of Nigerians. People need to be able to transact business electronically. It is about empowering and pushing forward the government’s wish for a cashless society. So it is all wrapped up in one. Whether it is the government or MTN or the licensee that has the highest stake, I don’t know. As for us, we are happy to see our customers enjoy these things.
Mr Richard Iweanoge
If something goes wrong with transactions who will be liable? Let me explain some of the things we have done around security because in the end it is really about people’s money. The first thing is that when you want to participate in mobile money services there are some key information we must have about you. You know most subscribers on the MTN network are registered now, so there is a record of their details, because NCC requires those things. At least we know your name and address and other vital information and somewhere in this country between NCC and us, we know exactly every customer we have. When you subscribe to mobile money, CBN regulations also requires that you fill a form and that form contains other vital information about you. Secondly, if you do register for mobile money service, part of the registration process also requires that you will be given a unique form of identifying yourself like a passport which is a four digit code and there is no transaction you can do that you will not be told to put in your code; and your code which is tied to your number is the unique access you have to carry
,
BY PRINCE OSUAGWU
We are providing mobile money services to customers in partnership with mobile money license holders. Like the name implies mobile money clearly means you need to transact with your mobile phone
,
out transactions. If you actually lose your phone and someone else wants to use the stolen phone to transact business, because he doesn’t have access to that unique code it will not go through except you have divulged it. The way I see this, when the banks came up with ATM cards, it was just a magnetic strip and people were hacking those things and succeeding. After a while they changed it to the pin and chip card. Now with your code, chip and pin, the number of successful fraudulent activities on your ATM card have
Vanguard, MONDAY,DECEMBER 10, 2012 — 29
Interview countries, it is the banks and some other people that own the licence. I really don’t think we might have done things differently apart from saying we own the licence. But in terms of the services, the functionalities are exactly the same.
s a record of their details, because NCC
Quality of service is still flagging. Will it not affect mobile money transactions? Mobile money at the moment actually runs on what we call USSD. USSD is that channel you use when you want to do account balance enquiries and if you notice, more often it delivers even when SMS fails in most cases. The channel through which mobile money goes is slightly different because we know it is money we are dealing with so we are constantly trying to optimize it so we don’t have issues with hanging network. But even if you do have issues the beauty of the electronic money transfer is that everything is traceable. You can track it and know exactly where it is. If there is an issue, we set up a dedicated help desk. The reason the help center number is not known is because only our agents and super agents that deal with
tage Kenya dominance es , almost come down to zero. The level of security we have in mobile money matches exactly what you have in a chip and pin solution. However, technology is ever changing. Someone someday might be able to discover loop holes but we are always going to be one step ahead in trying to find more secure solutions. Also remember these are all electronic transactions and because every single customer we have is registered, we know them. If anyone does any fraudulent activity and moves money we know exactly where it is coming from and we know exactly where it is going to. It can be investigated and people can be held responsible for it. It is not like cash that you can disappear with, it must go somewhere, and because it is going somewhere, we will know who owns the number. We have the person’s details and we can track it down.
I
f the CBN had adopted a mobile operator-led mobile money model, what do you think mobile operators would have done differently? Different countries have approached this in different ways but the end result has always been the same thing. In Uganda and Kenya for example it is the operators that have the licence. In some other
If you do register for mobile money service, part of the registration process also requires that you will be given a unique form of identifying yourself like a passport which is a four digit code and there is no transaction you can do that you will not be told to put in your code; and your code which is tied to your number is the unique access you have to carry out transactions
,
mobile money have access to calling it. So if a customer makes a transaction and it is not going right, you can call the mobile money help desk and the guys will look at it from the back end and tell you exactly what is going on. If you make a transaction and you have not received notification, the agents will tell you the state of the transaction. This will take away some of the apprehensions around maybe if the network is bad you may not be able to continue with your transaction. The frequency at which this even happens is quite low unlike SMS and calls.
carrying out transactions.
C
onsidering the poor literacy level in Nigeria, what specific measures will you take to ensure that mobile money is understood and used at the grassroots? It depends on what you consider to be illiteracy. You can be educated and at the same time be an illiterate and you can be uneducated and be very smart. Mobile money is really about financial inclusion. People carry out financial transactions every day and all we are trying to do with mobile money is to bring a lot of people within the country who currently don’t enjoy formal financial services unto the platform where they can actually carry out financial transactions and be within that formal channel. Almost everyone in this country owns a mobile phone so in my view mobile phones will be what credit cards are for people in the Western world. Everybody has access to it. In terms of illiteracy, if you can send a text message which I think the majority of mobile phone owners can do, then you can perform mobile money transaction. We have made it so simple that the numbers of steps you need to take to carry
out the transaction are pretty basic. Of course we have people in channel, we have people who we call super agents and agents with their principal role being to represent us in front of the customers and they have been properly trained by us. The goal is when the customer sit in front of them they can take the customer through how these things work. We constantly carry out training for them and do a lot of above-the-line advertising just so we can get the information and knowledge out there for people to transfer money.
Mr Richard Iweanoge How has the market responded to this Mobile Money initiative? I think quite enthusiastically. I was personally surprised last month when we went round the country launching mobile money and I was amazed with the turnout and the eagerness with which people came out wanting to register. At the moment we have seen close to 20,000 people registering on a daily basis for the service. It is astronomical considering that we just started and also considering that not too many people know about it and understand what it is all about. So to get this high number of people registering every day is significant. My view is that people are enthusiastic and they seem to want it and I think in the long run, it will be a success.
I
n your opinion, would you say that the cashless policy is succeeding? Mobile money is enhancing the government’s desire for a cashless society because now I can transfer money to my son in school, to my mother in the village electronically without the need to physically move cash from one location to another. Now I can actually buy things in certain places using my mobile money as a means of payment so I don’t need to carry cash as long as I have my phone which I have all the time with me. If you notice, your phone is the closest thing to you now. It is always with you so just having my phone with me means I have access to my money, which means I have access to
financial
I want you to emphasize more on the role MTN is playing in spreading agents in Nigeria because your customers may want to know those things you intend to put in place to probably ensure you have a wider spread than any other network? First of all, let me say I am not in competition with other networks on this. Our goal is to give customers the ability to do financial transactions where ever they are. People want to be able to send money to others anywhere and they can cash out where ever they are. So this is not a competition of any sort. What I think we can do is, we need to have a robust distribution channel, that is, enough people who take mobile money as a business they want to transact in and set up shop to transact mobile money business and these are basically retailers. We have a census that tells us that we have over a million retail points in Nigeria. We currently have in our data base of over 300,000 retail points that we interact with. If we can get just these retail points on boardbecause already we have this number - to mobile money. We don’t force people to become our agents. We try to create a value proposition that is compelling which people can see and get them interested in it. In terms of value proposition we have a very robust offer we give to people we call retail agents. These retail agents, for every transaction and every customer they register there is a certain commission that they earn for carrying out the services on our behalf. So if you go to them and you cash out or cash in or transfer money, there is something they get. We think that this proposition is compelling enough to propel them to want to join the business. Last month we had a trade launch where we went to almost 12 cities in the country. We called retailers, retail agents and super agents, told them what we wanted to do with mobile money and that they should register if they were interested. As we speak now, I don’t have the exact number but the enthusiasm we saw tells us that in a year’s time almost the number of people we have as retailers (MTN) will be involved in mobile money. Do you see your retail points in another two years surpassing the current retail customers you have? The next two years, mobile money points of service will be as ubiquitous as we currently have for points where airtime is sold. It will be as common as the points where you can buy airtime.
Do you entertain the fear
,
30 — Vanguard, MONDAY,DECEMBER 10, 2012
Vanguard, MONDAY,DECEMBER 10, 2012 — 31
Tax Matters
Imperatives of taxation on tourism development in Nigeria (1) Introduction Tourism is one of the world’s fastest growing industries as well as a major source of foreign exchange and employment for many developing countries. In realisation of the enormous benefits derivable from having a vibrant tourism industry, governments all over the world have intensified efforts at promoting the growth of tourism through the application of robust tax regimes. Aside from taxation serving as a source of revenue for developing the tourism industry, favourable tax incentives have also proven to be a potent tool for its development. Taxation is therefore necessary for the development of the Tourism industry which in turn contributes to boosting the tax revenue (in the form additional payment of Value Added Tax, Personal Income tax Companies Income Tax etc) accruing to the government. In this paper, I will like to dwell on the following: What is taxation? What is tourism? Classes of tourism; Needs for tourism; The tourism Industry; Tourism development; Why tourism development? Taxation as a catalyst for tourism development;Incentives existing in the Tax laws. Conclusion What is Taxation? Tax is a compulsory payment imposed by the government on its citizens to meet the expenditures of the government in the provision of amenities and general needs of its citizens. When citizens pay tax, they expect some benefits in return. Citizens therefore have a legitimate ground to demand for accountability in the utilisation of money collected from them in the form of tax by the government What is Tourism? Tourism refers to activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business or other purposes not related to the exercise of an activity remunerated from within the
place visited. It includes movement for all purposes as well as day visits or excursions. Tourism can be used to describe a system of interacting relationships of people, their need to travel outside their communities, and services that attempt to respond to these needs by supplying products. Tourism is conceptually and technically different from leisure travelling and recreation. Leisure is defined as free time, time at ones disposal that can be taken to embrace any activity apart from work and obligatory duties. Travelling refers to movement from one point to the other. Travelling is a form of spending one’s leisure time. It is an element of tourism as tourism is a broader concept. Recreation refers to the act of creating anew. It is the act of having discretionary spending of our leisure time. Recreation is about involving oneself in activities like sports, hobbies, games, travelling, and tourism in order to reinvigorate or refreshing oneself. Classes of Tourism Tourism can be classified as follows: International Tourism: Consists of inbound tourism, visits to a country by non-residents and outbound tourism, residents of a country visiting another country. Internal Tourism: Residents of
,
,
Tourism is conceptually and technically different from leisure travelling and recreation. Leisure is defined as free time, time at ones disposal that can be taken to embrace any activity apart from work and obligatory duties. Travelling refers to movement from one point to the other. Travelling is a form of spending one’s leisure time. It is an element of tourism as tourism is a broader concept
,
a country visiting own country. Domestic Tourism: Internal tourism plus inbound tourism (the tourism market of accommodation facilities and attractions within a country). National Tourism: Internal tourism plus outbound tourism (the resident tourism market for travel agents and airlines). Sports Tourism: This refers to travel which involves either viewing or participating in a sporting event staying outside one’s usual environment. Cultural Tourism: Forms of tourism concerned with a country or region’s arts and culture. It generally focuses on
For people to experience tourism, they usually need the following: Disposable income; Leisure time; Tourism infrastructure such as transport facilities and accommodation. Other factors such as health and motivation to travel
,
traditional communities who have diverse customs, unique form of arts and social practices which distinguish them from other types of culture. Film Tourism: This involves visiting locations where films are made, where TV series are in produced and where film festivals are being held. Needs for Tourism For people to experience tourism, they usually need the following: Disposable income Leisure time; Tourism infrastructure such as transport facilities and accommodation. Other factors such as health and motivation to travel. The Tourism Industry The Tourism industry refers to a group of firms involved in the business of identifying the needs of tourists and striving to meet those needs with the minimum resource spending possible in order to make a profit. As a service industry, the tourism industry has numerous tangible and intangible elements. Major tangible elements include t r a n s p o r t a t i o n , accommodation and other components for the hospitality industry. Major intangible elements relate to the purpose or motivation for becoming a tourist, such as rest, relaxation, the opportunity to meet new people and experience other cultures or simply to do something
different or have an adventure. The tourist industry includes: Those sectors which enable the tourist to travel to and from the destination (for example travel agents, airlines, bus companies, tour operators and car rental companies); Those sectors which are part of the product at the destination (for example accommodation, facilities and attractions); The human component of tourism (the labour force); The public sector or government agencies, regional tourism organisation, professional associations and industry training organisations. What is Tourism Development? Tourism Development refers to the totality of activities of the government and industry operators aimed at expanding the operation and enhancing the quality of service delivered to tourists by the industry. Such activities include: Provision of land (usually done by government designating certain land space as Tourism Development Areas i.e. the coastal area of Lagos); Building of transport facilities to allow for easy accessibility to tourist centres; Building accommodation facilities and parks; Developing geographical features like beaches, waterfalls, springs, ranches and mountain ranges etc; Introduction of favourable tax regime; Ensuring stable democratic government; Provision of water, electricity and telecommunication facilities etc Why Tourism Development? Tourism is vital to the well being of many countries because of : The income generated by the consumption of goods and services by tourists; The taxes levied on businesses in the tourism industry; The opportunity for employment and economic advancement derivable from working in the industry. The economic benefits of tourism, however real and significant they may be, do not constitute the only criteria for government to encourage tourism.
32 — Vanguard, MONDAY, DECEMBER 10, 2012
Appointments vicahiyoung@yahoo.com 08033348923
BRIEFS Director of Communication Anglican Communion bags award
H
E A D o f Communication, Church of Nigeria (Anglican Communion), Foluso Taiwo, has been honoured for his contribution to the development of Journalism in Nigeria. The award of excellence was bestowed on him at the official inauguration of Freelance and Independent Broadcasters’ Association of Nigeria’s (FIBAN) newly elected executives led by Mr. Olu Akindele in Abuja. Taiwo, popularly known as ‘Okookan La’ ji oo’, a Yourba slogan to end his 8 pm Yoruba news broadcast on Osun State Broadcast Corporation (OSBC) Television, told Vanguard after the ceremony that good governance was the only antidote to the country’s problems. A Season Broadcaster who dedicated the award to his Family, urged media practitioners to imbibe what he called ‘developmental journalism’ without sacrificing objectivity, fairness and balancing to ensure national development. Earlier, Chairman, FIBAN Abuja Chapter, Olu Akindele, promised that they would not relent their efforts “to represent Nigerians interest in all our programming both in electronic and print.”
FG, NDE verify SURE-P graduate interns
F
EDERAL Ministry of Finance in collaboration with National Directorate of Employment, NDE, has conducted a verification of graduate interns, for Subsidy Reinvestment and Empowerment (SURE-P) in NDE Lagos State Office. A statement by SURE-P , State Implementation Committee, said the verification exercise which commenced on 3rd December, th 2012 and lapsed on 5 December 2012. The statement said officials from the Ministry of Finance led by Mr. Felix Ovedje, the team leader verified about 41 graduates who did their registration online and had been successfully shortlisted as beneficiaries of the SUREP, provided they meet up with the necessary requirements for verification.
Ogbeifun now President of Institute of Chartered Mediators, Conciliators F
ORMER President of Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and current Deputy Manager, Employee Relations, Nigerian National Petroleum Corporation, NNPC, Dr. Louis Brown Ogbeifun, has been elected President of the Institute of Chartered Mediators and Conciliators, ICMC, Nigeria. ICMC is a body of mediators that has well over 6,000 members. Ogbeifun emerged President of ICMC at its Annual General Meeting, AGM, held in Abuja,the Federal Capital Territory, FCT. A team player/builder, a motivational speaker, a mediator and an industrial relations expert, he holds the Bachelor of Public Administration and Masters in Planning and Health Management degrees of the University of Benin, Benin City. In recognition of his leadership qualities he was
President of ICMC, Dr. Brown Ogbeifun with the first Military Administrator of Rivers, His Royal Majesty Alfred Diette Spiff and Chief Paddy Njoku, immediate past President of ICMC.
conferred with a Honorary Doctor of Philosophy in Leadership, Social and Community Development HONORIS CAUSA by Evangel Christian University, 2003 (Lagos Nigeria), Ogbeifun was elected the 10th President of PENGASSAN, the White
Collar employees’ body of the oil and gas industry in 2003. In 2004 he was elected the 1st Deputy President General of the Trade Union Congress of Nigeria, TUC, umbrella body for senior staff associations in Nigeria. A Deputy Manager,
Employee Relations, NNPC, he had carried out several mediations with positive results in the Oil and Gas industry thereby helping to promote industrial peace and harmony in that sector. Ogbeifun has served the nation in several Committees among which are: Committee on Socio-Economic Impact of Downstream Deregulation in Nigeria, 2003; Committee on the Privatization of NNPC Downstream Sector, 2003/ 2004; Nigeria Stakeholders Work Group of the Nigerian Extractive Industry Transparency Initiative (NEITI) 2004/2005; Independent Consolidated and Cushioning Measures Committee, 2004/2005. Also, the new President of ICMC has been honoured with several awards such as Patriotic Achiever’s Award (2003), Diamond Award of professional Excellence (2003), Outstanding Union Leader Award (2003), Role Model Gold Award (2003). He is an author of several articles in various newspapers in Nigeria and the book “The Role of labour unions in the Oil and gas Industry in Nigeria: A Practitioner’s Perspective”
Olisa heads Rivers Signage Agency T
HE Rivers State government has announced the appointment of Mr. Christopher Olisa as Sole Administrator overseeing the operations of the recently established Rivers State Signage Agency. Prior to his appointment, Olisa was an Associate Director at Mindshare Media Agency, a leading generalist Media consulting firm, part of the WPP Global network. His responsibility was to grow the Out Of Home arm of the business, cutting across several blue chip clients. Olisa brings on board to this new responsibility over two decades experience in advertising and outdoor media practice in leading agencies.
•Christopher Olisa
A thorough-bred marketing communications and brand building expert, Olisa had during his years of p r a c t i c e i n t o p rated advertising and outdoor media agencies such as Ogilvy Benson and Mather, Prima Garnet Ogilvy and M e d i a s h a r e Nigeria, distinguished himself as a rare brand building
expert and marketing communications strategist. Industry watchers are excited at the prospects of his immense proficiency, ability and goodwill in regulating and bringing sanity to outdoor and signage practice in Rivers state. One of the rare stock of well trained and versatile media specialists, his profile and
pedigree reveals that Olisa had at different times in his years of practice been involved in the building of leading iconic brands in diverse sectors of the nation’s economy including, Financial services, Telecommunications, Health, Oil and Gas, Insurance, Satellite Television, FMCG and Pharmaceuticals.
Zucker named President of CNN
C
ABLE News Network, CNN, has named Jeff Zucker, as its President He will assume office in January 2013, to oversee a portfolio of 23 branded news and information businesses that includes CNN/U.S, CNN International, CNN.com and HLN and reaches more than 2 billion people in some 200 countries around the world. Zucker will report to Kent and will be based at CNN in New York. The announcement of the appointment Zucker as the President of CNN Worldwide, was made by Phil Kent, Chairman/Chief Executive Officer, CEO of CNN parent company Turner Broadcasting System, Inc. Zucker started his 25-year
career with NBC as a researcher for NBC Sports’ coverage of the 1988 Summer Olympic Games and rose to president and chief executive officer of NBC Universal. He was named executive producer of Today January 1992; under his eight-year leadership, the program was the most-watched morning news show and the most profitable program on television. Zucker went on to executive-produce NBC Nightly News with Tom Brokaw the network’s coverage of the Persian Gulf War, the 1993 and 1997 presidential inaugurations and the 2000 elections. He was promoted to president of NBC Entertainment, president of
the NBC Entertainment, News & Cable group and president and CEO of the NBC Universal Television Group. Currently, Zucker is executive producer of the syndicated daytime show Katie. “Jeff ’s experience as a news executive is unmatched for its breadth and success,” said Kent. “He built and sustained the number-one brand in morning news, and under his watch NBC’s signature news programming set a standard for quality and professionalism. As a programmer, a brand-builder and a leader, he will bring energy and new thinking to CNN. I couldn’t be happier to welcome him or more excited about what he’ll accomplish here.”
Vanguard, MONDAY, DECEMBER 10, 2012 — 33
,
NIGERIA: CONDEMNED TO PERPETUAL UNDER-DEVELOPMENT “When those in office regard the power vested in them as personal prerogative, they inevitably enrich themselves, promote their families, favour their friends. The fundamental structures of the modern state are eroded like supporting beams of a house after termites have attacked them. Then the people have to pay dearly and long for the sins and crimes of their leaders”. Lee Kuan Yew, Singapore’s Prime Minister. (VANGUARD BOOK OF QUOTATIONS, p 2). The man who led Singapore from the Third World to the First in one generation has had no equal in Nigeria and certainly doesn’t have now. All our living Heads of State put together have done less than one tenth of what Yew did for the tiny nation of Singapore despite the galling pretences of the most sellrighteous one among them; by that I mean Obasanjo. There is no single living Head of State and almost none among the dead who would not be indicted on charges of regarding “the power vested” in him “as personal prerogative”. And that culture is getting worse by the day. That “they enrich themselves, promote their families, favour their friends” is legendary – even by Africa’s low standards for accountability and transparency in governance. The rest of the world had for long accepted that we in the Dark continent are still living in the Dark Ages given the leadership we have had since the “Wind of Change” (courtesy Harold MacMillan, British Prime
Minister) which brought disorder called independence into previously wellorganised colonies. Truth is, there is no single part of this continent, certainly not Nigeria, which was not better governed in 1952 than now. However, never in our disgraceful history, since independence has impunity, the arrogance of power and total disregard for the development of Nigeria, been so glaringly exhibited as we have experienced since 1999 under all governments – with few exceptions. Never has the welfare of the majority glaringly taken such low priority to the prerogatives of leaders. In the last three weeks, Nigerians have read how the Presidency intends to spend N2.3 billion on food, drinks and welfare of visitors to Aso Rock; last year the sum budgeted was N1.3 billion. But, since only Unijankara people protested, the collective silence was taken as consent. One blockhead even invited me to join them at Aso Rock if I want to eat. Now, the budget for food and drinks, in 2013, has risen by 80%, from this year ’s estimates, while the entire budget by less than five percent. Meanwhile another N2.2 billion project has been slated for 2013 – the construction of new Vice President’s House. This will make it the third Vice-President’s house that the Federal government of Nigeria under the PDP will build since 1999. The United States of America and Britain had retained the same structures for their leaders for centuries; only making
However, never in our disgraceful history, since independence has impunity, the arrogance of power and total disregard for the development of Nigeria, been so glaringly exhibited as we have experienced since 1999 under all governments – with few exceptions
,
renovations and improvements as technology and security will suggest. But, not Nigeria; where the comfort of Nigerians is more important than the welfare of the people they govern. This government must be in love with N2 billion projects because there is a third one – a N2.2 billion contract to build a conference hall in the Presidency. The excuse this time is that it will accommodate 150 people at a time. Meanwhile, Abuja is saturated with halls of that size. To PUNCH, we owe a debt of gratitude for drawing our
attention to the fact that the Federal government of Nigeria spend N9 billion annually on the I0-aircraft Presidential fleet. The same paper went on to point out that the leaders of nations, far more developed and richer than Nigeria, have smaller fleets; some don’t have any. The abridged list of countries is presented below: COUNTRY PRESIDENTIAL FLEET Nigeria Japan Netherlands United Kingdom Ghana Algeria South Africa
10 2 2 0 1 1 1
Japan has the third largest economy in the world; South Africa is the largest economy in Africa. Their leaders keep only two aircraft idle most of the time. The Nigerian President keeps ten aircraft grounded and maintained at great expense by Nigerians – virtually all the time. So, in 2013 we can expect to spend another N9 billion on wasting assets instead of active investments. It is clear to even to the ordinary man that if half the cost of maintaining the Presidential jet is spent on roads or fertilizer every year Nigerians will benefit more than they do with so much going into the “prerogatives” of our leaders. However, all those are small potatoes compared to the corruption, lack of transparency and accountability in the oil and gas sectors – where more money that should be paid
into the Federation Account for sharing between the three tiers of government simply vanish into private pockets. Few Nigerians are aware that Deep Water oil operations on which the International Oil Companies have invested about $46 billion (that is nine times the 2013 budget) had been generating funds for the country. How much was generated last year, this year and years before remain a secret. The 2013 budget has followed the same pattern of cover-up because it makes no reference to this important source of revenue. By the same token, there has been no account of the disposition of the funds for the Petroleum Development Trust Fund, PDTF, which is first charge against oil proceeds and mandatorily to be given to the PDTF Secretariat for specified development projects. The PDTF was much abused under Obasanjo and there is every reason to believe that it is still being looted at the moment. PDTF is another agency under the Ministry of Petroleum whose activities have been placed under a veil of darkness – for obvious reasons. While Japan has been described as nation which cannot afford to waste anything, and that explains its rise to economic power. Nigeria wastes everything, our leaders encourage profligacy and corruption. That explains why with our vast resource advantage over Japan, we are poorer and will remain so for a long time to come. We simply lack the leaders to take us to help us develop.
Business & Economy
N16.8M suit filed against Ethiopian Airlines By ABDULWAHAB ABDULAH
A
n Abuja based legal practitioner, Aikhunegbe Anthony Malik, has filed a N16.8 million suit before a Federal High Court, Abuja against the Ethiopian Airlines over alleged breach of contract and missing of luggage. In a motion on notice with No. ABJ/CS/664/2012 filed by the lawyer, Aikhunegbe Anthony Malik, who claimed to have travelled with the Airline from United Arab Emirates, UAE ,to Nigeria on September 10, 2012, is asking for the payment of N16, 882, 500 million as general, aggravated and exemplary
damages against the company for his inability to get his luggages as at when due.
According to him, he travelled with the Airlines from UAE with two different luggages weighing 20 kg
each, which were properly tagged, but on his arrival in Abuja, his last destination, he couldn’t lay his hands on one of the luggages as it got missing, until after 11 days after he had suffered so much
discomfort, pain, and also made repayment for several goods, he bought for his friends who were getting married.
You can’t ground airline because of crash — Joji By LAWANI MIKAIRU
S
ecretary General of the Airlines Operators of Nigeria ,AON, Captain Mohammed Joji has said that airlines should not be grounded because of air crash. This is coming on the heels of the recent Senate Committee on Aviation indictment of Dana Airline that it was negligence that
caused the crash of June 3rd at Iju-Shaga area of Lagos State. Addressing a press conference in Lagos , Captain Joji who spoke on behalf of AON said they felt compelled “to clear the distortion fed to the general public by the Senate Committee on Aviation by its Chairman Senator Hope Uzodimma that it was negligence on the part of the
airline that caused the Dana crash”. The AON further alleged that the Senate Committee accused Dana Air of excessively declaring air returns and also that the Senate investigative panel on Dana crash ignorantly insinuated that Dana aircraft MD 83 was too old to be allowed to fly and that Dana Air is the only airline in Africa
that flies MD 83 aircraft. The AON believes that Dana Air pilots, if ever they actually declare air return, should be commended “as any pilot that declares an air return deserves a medal”. They further said no pilot will like to fly to the limit of ‘’discrepancies’’ thereby risking the lives of passengers.
34 — Vanguard, MONDAY, DECEMBER 10, 2012
FPA
Vanguard, MONDAY, DECEMBER 10, 2012 — 35
“
FPA
36 — Vanguard, MONDAY, DECEMBER 10, 2012
ICT BRIEF
VConnect unveils new 2.0 website
A
local search engine, and information service provider VConnect by Global Services Limited is set to change the game once again in the information service and search engine business in Nigeria with the unveiling of its new look 2.0 website www.vconnect.com based on users feedback, services and coverage. The new VConnect 2.0 make over provides a fresh look and user friendly website that enables users to search for information faster and more accurate than ever before. The 2.0 Website also allows for more in-depth search results. According to the General Manager, VConnect Global Services Limited, Mr. Deepankar Rustagi, the new website will enhance quality service delivery to the esteemed users of the service for better and faster search result. Rustagi said “ the new look VConnect 2.0 gives a better resolution, it is faster both on laptop and desktops with more friendly interface for the users and there has been a drastic increase in the number of users connecting due to these improvements” He further revealed that the company has achieved two remarkable milestones by growing the database from zero to Five Hundred Thousand listed and verified businesses mainly of Small and Medium Enterprises (SME’s) within two years and also offering a service that is more optimized for mobile application to help search faster and better. “We have taken the feedback from the users on mobile application and have improved based on local needs and have optimized it to smart phones and android phones.
Stories by PRINCE OSUAGWU
T
he Federal Government’s drive for Foreign Direct Investment (FDI) seems to be yielding positive result. Both old and new foreign investors are currently indicating positive interest in strengthening or expanding their existing business concerns in the country. For instance, last week, one of the world’s leading retail foreign exchange companies, Travelex, renewed its commitment to seeing Nigeria’s economy stabilize with the visit of top executives of its UK outfit. Although the company said it has committed to the economic growth of the country for 33 years running, it also promised to provide cutting edge technology that can help the government actualise the cashless Nigeria initiative, much as it would renew investment drive to help in stabilizing the country’s economy. The company said this vision and strive to match words with action have seen its UK top executives embarking on business visits to the country twice in less than six months. First was in May this year when the global Chief Executive Officer (CEO), of Travelex Group UK Ltd, Peter Jackson visited with a firm commitment to contribute to the Nigerian economy through foreign currency trade and partnership with authorities to fight counterfeiting. Jackson was bold to say that though the security situation in the country was challenging to investors, it was not peculiar to Nigeria as even London and other business hubs in the world have their own cross to carry. For him, “Travelex has been
L-R: Abdulwaheed Omar, President of Nigeria Labour Congress, Chief Emeka Ihedioha, Deputy Speaker of the House of Representatives, Comrade Adams Oshiomhole, Executive Governor of Edo State, Mrs. Omobola Johnson, Minister of Communications and Technology, and Leo Stan Ekeh, Chairman, Buyright Africa unveiling the symbol of the Nigerian Employees Digital Welfare Scheme, NEDWS, at the launch of the product in Abuja, at the weekend
Travelex promises tech support for cashless Nigeria …Commits to huge investment for Nigeria’s economic growth operating in Nigeria for 33years. I think we’ve got a great opportunity to expand our business in the country and to further explore the opportunity to expand our frontiers. We are trying to do some other things that we do in other parts of the world. “I don’t want to pretend that there are no security issues in Nigeria, but it is not peculiar to Nigeria. In Indonesia, Malaysia, New York and London, in all of these places, they all have security challenges. I think what is important is to think seriously about how to deal with them. It is not a unique issue”, Jackson added. Less than six months after this statement of confidence in Nigeria’s business climate, Chairman and Founder of Travelex, Lloyd Dorfman, came to see things for himself and going by his pronouncements, it could only
be better for Travelex and Nigeria. Dorfman’s courtesy visits to business interests and places in the country came up with a bold statement that Travelex was interested in expanding its business operations in the country. The first beneficiary of the expansion programme is the nation’s aviation sector where air travellers and airport users would be provided with seamless retail foreign exchange services comparable to what obtains in other international and domestic airports worldwide. The implication is that air travellers in the country will have access to a basket of more than 80 currencies thereby solving their travel money needs in a stress free environment. This will be achieved through setting up bureaux and installation of world-class equipment and
technologies in all the major airports around the country by Travelex. Mr. Dorfman believes that with the company’s cuttingedge technology in the provision of foreign exchange ATMs, Travelex value addition presence in the country’s airports would help to boost the country’s cashless initiative. While at the Ministry of Aviation, Princess Stella Oduah, Aviation Minister expressed optimism at the prospects of partnering with Travelex to enhance Nigerians’ travel experience. “We are looking for foreign investors, so we are extremely excited about this opportunity to work with you. We are embarking on very ambitious expansion programme of our airports, with the rehabilitation, reconstruction and remodelling of the old terminals”.
TD captures iDirect to deepen broadband culture in West Africa
G
lobal satellite and hub infrastructure providers, iDirect, last week, joined other international brands like Lenovo, Samsung, Canon and HP among others to scramble for the West African IT market, after tying up a business deal with Nigeria’s ICT distribution expert, Technology Distribution, TD. iDirect said its move was to address the growing complexity of deploying and managing global IP networks in Nigeria. TD, through its reseller network spanning across West Africa, would now stock and distribute iDirect
portfolio of hubs, routers and network management software and consolidate its positioning as the foremost one-stop-shop for ICT products. Giving insights on the deal, TD’s Executive Director, Marketing, Mrs. Chioma Chimere, said her company grabbed the juicy deal due to the pedigree it has maintained over the years, adding that TD has already trained Resellers for the marketing of the iDirect products. Also, Sales Director Africa, iDirect, Mr Cheikh Dla, said that the TD partnership would offer
products for the ground infrastructure required to shatter the myth surrounding the Internet. It will enable commercial and social enterprises, military establishments, governments and grassroots organizers to build satellite based networks that yield higher bandwidth efficiency with lower budgets. He explained that iDirect’s product lines integrate a wide variety of hardware, software and services seamlessly into a complete satellite communications platform. iDirect’s hardware include powerful universal satellite hubs and versatile routers to
meet all requirements for scalability and durability; a comprehensive range of applications-specific products such as network accelerators and optimizers that enhance network performance. For him, iDirect produces triple solutions VoIP, data and video internet experience for broadband applications that catalyze an efficient and superior bandwidth throughout Nigeria. Dla revealed that the choice of TD followed a painstaking effort to find a Distributor in West Africa that had the capacities to deliver the iDirect corporate objectives in the region.
Vanguard, MONDAY, DECEMBER 10, 2012 — 37
Agric
How Africa can grow capacity to feed itself- AGRA President By JIMOH BABATUNDE with agency reports
A
lliance for Green Revolution in Africa (AGRA)’s President Jane Karuku has revealed
that for Africa to feed itself and help feed the world that three decisive actions in core areas must be addressed. President Jane Karuku said we must build new, innovative publicprivate partnerships; ensure
Agriculture Minister, Dr. Akinwumi Adesina in a chat with AGRA President Jane Karuku at the AGRA forum in Arusha, Tanzania recently. pix by Jimoh Babatunde
C M Y K
international donors and African policymakers keep and fund their commitments and listen to what farmers really want and need. Speaking at the World Food Prize Symposium in the United States to discuss the need for public-private partnerships and new commitments to fund agricultural development, she said AGRA believes that in order to rapidly expand African agricultural yields and improve global economic growth that there is need to work creatively across sectors. “AGRA has been working to establish small risk-sharing loans with several commercial 2banks in order to leverage more affordable credit for farmers and agribusinesses. “Together with our financial partners, we have made a total of $17 million US dollars available to three commercial banks, which leveraged access to about $160 million US dollars in credit to farmers and African businesspeople on the ground. She said their efforts demonstrated the effectiveness of this approach, which is now being taken up
on a much larger scale by several African governments. “The most successful partnerships are those in which everyone has put money on the table and is tangibly invested in a shared outcome. “Whether we are working with private-sector agribusinesses, small farmers, governments, or international NGOs, we know that in order to succeed, we must share skills and resources to move African agriculture forward. While asking that African governments and international donors be held accountable to keep and fund their commitments, she said Africa’s smallholder farmers deserve nothing less than concrete action. “For far too long we have seen leaders pledge without paying. I am here today to call for the funds that have been committed in Africa and abroad to reach the farmers who need it most. “When the funds reach our fields, we must ensure they are invested across the full agricultural value chain – from better seeds and soils, to improved markets, more
affordable financing and smarter policies. We need to ensure balanced growth to transform subsistence farming into a viable commercial enterprise that will drive economic growth.” AGRA firmly believes that African farmers can lead the way to a stronger global economy. If we keep our commitments today, Africa will make a substantial contribution to global food security tomorrow. Jane Karuku said most importantly, that there is need to continue to listen to the voices of African farmers, just as she asked that there is need to deliver solutions that address the challenges and opportunities farmers face every day in the fields and marketplace. “Farmers also are looking to us for more options to grow Africa’s staple crops. We need to provide more robust varieties that can better withstand shifting weather patterns. But I don’t need to tell a room full of farmers from Iowa about the importance of growing drought-tolerant crops!”
38 — Vanguard, MONDAY, DECEMBER 10, 2012
FPA
Vanguard, MONDAY, DECEMBER 10, 2012 — 39
Advertising, Media & Marketing
Pay TV Licence: Knocks for Gotv operations in Nigeria Stories by PRINCEWILL EKWUJURU
T
he entry of Gotv into Nigeria’s pay TV market was without doubt celebrated with enthusiasm from Nigerians. This could be attributed to the fact that Nigerians wanted competition, because only a negligible few could actually afford the cost of acquisition and subscription. It’s a common knowledge that the pay Tv market in this part of the world was being dominated by Digital Satellite Television, DSTV, from the stable of Multichoice, with a negligible few having access to the services of the pay TV because of its cost of acquisition and subscription, which were beyond the reach of an average Nigerians. Interestingly, with the June 17, 2015 deadline given by the I n t e r n a t i o n a l Telecommunications Union for the transition from analogue to digital television fast approaching, the pay Tv market seems to be witnessing a radical change. More operators are signifying their intentions to participate in that market, while some are increasingly becoming entrenched in the market, thereby giving DSTV, the dominant operator in the segment a run for its money. Conversely, the advent of Gotv into the nation’s pay Tv market has generated controversies in the market, where others MyTv, Infinity
Tv, Hitv though dead, have not succeeded may be due to their inability to stand the financial power of the leader; Multichoice. There are insinuations that Gotv do not possess the licence to operate or Is it riding on the back of Multichoice to do business in Nigeria, this questions and more are being asked by concerned Nigerians. According to them, Gotv was never, at any time, licensed to operate a digital terrestrial television (DTT) services as it is presently doing, adding that what it is licensed to do is the digital video broadcasting handheld, a
licence that restricts it to provide service directly to handheld devices. They have argued that since the federal government’s pronouncement, through the Honourable Minister of Information, Mr. Labaran Maku, in April this year, that the government would be licensing at least two signal distributors, out of which one would be public signal distributor that would comprise of the broadcasting access of NTA, FRCN and VON, another private signal distributor to steer away the market from being monopolistic, and to enable subscribers get values for their money. “We would be licensing at least two signal distributors;
one will be public signal distributor that will comprise of the broadcasting access of NTA, FRCN and VON. We also will be licensing another private signal distributor to provide the necessary competition that will give values to consumers of broadcasting content.” Though seen as a welcome development by many, especially those who would have loved to participate as private signal distributors, unfortunately their zeal was dampened with the sudden debut of Gotv without a bidding process. Questions are if the company bidded who competed with it?. Gotv started operation in Ibadan, Oyo State, Port Harcourt, River State and then Lagos, bringing cheaper pay TV services to subscribers in those states, it has become a pain in the neck of indigenous stakeholders.
From Left: Big Brother All Stars Winner, Uti Nwachukwu (Far right) and Tinsel actor, Gideon Okeke (far right) posing with Richard Obieche (second from left) and Mike Chinedu (second from right) both car winners in the Star Time To Shine Promo during the car presentation ceremony held at the corporate Headquarters of Nigerian Breweries Plc in Lagos.
ADVAN Forum: Marketers need to transform their thinking—Guinness MD
T
he world is changing and the game has to change. What has served us well now is not enough to take us to the future. We need to transform a lot of things including how we think and how we do things. These were the words of Mr. Seni Adetu, Managing Director of Guinness Nigeria when he spoke on what advertising will look like by 2013, at the 20th anniversary of the Advertising Association of Nigeria (ADVAN) in Lagos recently. He advised marketers to increase their organisation’s return on investment (RoI)by thinking about their brands using a ‘Fish’ model. Using the concept of the body of a fish as the brand, Adetu said for advertising to C M Y K
work, it must have the eye of a fish which is direction and consumer insight. “Don’t create any advertisement without having insight. If your client is rushing you, calm him and let him realize that without your understanding of the consumers' insight you are like a fish without an eye. The tail of the fish gives fish power and propels the fish, as this relates to brand management and strategy. The Guinness boss called for a change in the way marketers perceive advertising. “What matters in Ad creation is that it should elicit reactions that will impact on brand growth”, he said, maintaining that CEOs will continue to cut Ad budgets in times of operational difficulties if
adverts don’t deliver top and bottom lines. He further told the gathering comprising ADVAN members, advertising agencies members and journalists that marketers advertise to win the hearts and minds of consumers, building consumer connection and growing brand equity, clarifying that any advertisement that does not deliver these goals is not acceptable, but warned that marketers must be very clear on the key performance indicators they set for themselves. He said operational marketing is the type of marketing that works and supports top line. If you cannot prove that your
marketing will make organizations like Guinness grow their top line, then we will not embark on it. Explaining why some organizations like Coke and Guinness have survived years, he said it is because they have standards which they maintain irrespective of countries they operate, saying no body will lower standard for anybody and said perhaps that is why adverts are shot abroad. Also speaking, the president of ADVAN, Kola Oyeyemi said the objectives of the association is to build capacity, adding that the body will in due course sign MoU with credible organizations on capacity building. He said the body will pursue global best standards and industry harmony.
BRIEFS Ikeja City Mall to add new sections
W
ith 95 percent occupation, Ikeja City Mall (ICM), home to international and local brands is set to add new sections to the mall. The new sections according to the Centre Manager Mrs. Debola Majekodunmi, said that will include the children section and a cinema hall. Speaking to the media, Majekodunmi, in a chat at the centre’s management office, said that the new sections are being added to the mall that will include popular food court, “this is to make it a destination point that caters for all members of the family. There’s something for everyone.” With these additions, she said the mall guarantees competitive prices and above the par customer service, that will longer be any need for Nigerians to go to dubai and other places for shopping, majekodunmi opined. There are a number of international brands available here, the shopping experience is great and the range of brands ,-local and international is vast. Nigerians are therefore advised to look inward. Why go abroad to buy the brands that are available here?. She queried.
Cofi-cofi enters market
J
oennec Marketing Company Limited has secured the franchise to market Cofi -Cofi in Nigeria. The registration of Cofi Cofi by the National Agency for Food Drug Administration and Control (NAFDAC) has brought new innovation into the coffee market in Nigeria, a market that is gradually growing as coffee drinking is increasing by the day. At a media launch of the product recently in Lagos, the Managing Director of Joennec Marketing Company, Azu Anyanso, said: “The manufacturer of Cofi Cofi product has also taken into consideration the importance of retail shelf merchandising and therefore packaged the product in special stand-up bags, in bright and attractive colours that make it to have ‘eye catching’ effect on the consumers.”
40 — Vanguard, MONDAY, DECEMBER 10, 2012
Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com
Tel:0817 002 3569
WAIVERS FOR THE RICH, HARD LABOUR FOR THE POOR!
T
he primary underlying principle in a social contract in a modern democratic dispensation is that of equality of all persons. Instructively, the higher the degree of social inequity, the greater also will be the level of national instability, and the more restrained will be that nation’s economic growth trajectory. Consequently, it becomes inexplicable that some government policies and initiatives facilitate the prosperity of a favoured subgroup at the expense of the vast majority. Curiously, projects and policies overtly intended to improve mass social welfare have often become a bonanza for a select few, while the masses remain victims of such exploitation. Presidential import waivers are good examples of such misguided government interventions. In spite of the gross abuse associated with import waivers, no recipient of waivers has ever been formally reprimanded for improper conduct! The damning revelation from partial waiver on fuel prices is another example of how a handful of Nigerians can collude with collaborators in government to steal hundreds of billions of naira from the treasury, against the apparent intention of policy! Regrettably, those who facilitated or approved false
applications for subsidy payments have not suffered any overt sanction, and probably never will. The plea bargain is also a perfection of a waiver system, which protects the rich and powerful at the expense of the masses; several political office holders liberally abused their offices and ultimately went scot-free after refunding peanuts, to avoid prosecution or the need to repay billions of naira stolen while in public office! The interventions of the Central Bank and AMCON in the banking sector serve the same purpose as waivers; the promise that injection of trillions of naira public funds would reposition banks to actively support and energise the real sector has remained largely unfulfilled. The waiver ‘racket’ has now found fertile grounds in the capital market. The unfettered opportunities for investors to borrow at over 20% in order to acquire the price-manipulated shares of lending banks was primarily responsible for stock market failure in 2008. Worse still, it has become evident that most of these margin loans were grossly undercollateralised, a practice, which apparently contravenes the provisions of the Investments and Securities Act (ISA). Although AMCON may have purchased the toxic assets at a discounted price
of about N42bn, in reality, the current value of the underlying assets or collaterals is only about N19.6bn according to the Minister! Consequently, AMCON’s over N2 trillion incursion in the money market may, in reality, also be worth less than N1 trillion at current valuation, a wasteful loss of public funds and threat to AMCON’s survival!! Inexplicably, none of the 84 stockbrokers identified by both AMCON and SEC as
,
lacked the fundamentals to justify their inordinately high prices! Since the public did not participate in the profits of these stockbrokers when the going was good, one wonders why AMCON should forego N22.6bn of its asset base as debt forgiveness to these gamblers. There is undoubtedly the moral hazard that this type of waiver will send the wrong signal to operators in the stock market and elsewhere, that
Since the public did not participate in the profits of these stockbrokers when the going was good, one wonders why AMCON should forego N22.6bn of its asset base as debt forgiveness to these gamblers.
guilty of this infraction will be prosecuted! Curiously, these offenders are now adjudged worthy of debt waivers! This particular debt forgiveness is more unpalatable because the beneficiaries are private businesses and speculators, who willfully engaged in the casino of the stock market, with the full knowledge that the equity they purchased
announced by Dr. OkonjoIweala cannot truly deter further malfeasance in the securities market. In addition to the debt waiver, the Minister also announced the elimination of stamp duties and VAT on stock market transaction fees. In other words, while operators in the real sector have ceaselessly decried the multiple taxes on their depleting incomes without any sympathetic response from government, the Minister has, with this measure, exempted commissions earned on traded value of shares (stock market gambling) and stamp duties on transaction fees from VAT payments. Indeed, other than the removal of partial fuel subsidy, it is difficult to identify any waiver that has brought succour directly to the masses. In conclusion, reduction in rate of inflation and a stronger naira remain the most potent waivers for sustaining enduring improved economic growth and social welfare; instructively, however, such waivers cannot be available with our recurrent burden of a cash surfeit economy caused by CBN’s substitution of naira allocations for dollar denominated revenue.
,
government would cover their backs even if they broke the laws and operated recklessly. It is not yet clear how the securities market will become reenergised by the reentry of the 84 stockbrokers, because with a zero liquidity base, as things stand, they cannot bring fresh capital into the market; besides, the N22.6bn waiver and the attendant slap-on-the-wrist sanctions
SAVE THE NAIRA, SAVE NIGERIANS!
Business Economy
SURE-P Chairman refutes allegation of financial impropriety By PETER EGWUATU
T
he Chairman, S u b s i d y Reinvestment and Empowerment Programme (SURE-P), Dr. Christopher Kolade, weekend, debunked claims that its committee has spent N2.2 billion on secretariat services in its 10 months of operation as reported by some media, saying it was not true. He also disclosed that out of the N180 billion accrued from the subsidy, only 42 per cent goes to the federal government, while 54 per cent goes to the states and local governments. The SURE-P chairman disclosed this during an interactive session with editors in both print and electronic media, saying the committee has only spend N1 billion. So where is the N2.2 C M Y K
billion coming from. We did not receive any money from the government to carry out our responsibility until July, 2012. The money from the subsidy does not come to the committee directly but are lodged with the Central Bank of Nigeria (CBN). So before we withdraw any money for any particular project the budget office must approve of it.” “Government has determined the areas it wanted to intervene before we came on board. Our own responsibility is to ensure that money allocated for any project is used where it was mapped out for. We did not determine what project we are carrying out. Our role is to make sure we get value for the money spent. It is the federal government that has responsibility to determine what to spend the money for. We want to do a job that has
quality. The National Assembly approved all the projects and money allocated for them. Before we took the job, we agreed among ourselves as a committee that whatever we are going to do we should do it with probity, accountability and transparency. That has been my words any where I work. I brought in my integrity, experience and God to serve this country, none of my committee member is out of job, they are people who are doing well financially and otherwise in their various fields. So the National Assembly don’t just come on people and rubbish them simply because they come to serve their country.” When asked whether he will continue to serve the country, he said, “Of course I don’t have any other country to contribute my quota. I will, no
matter the pressure , provided the committee is doing things that will benefit the ordinary Nigerians. If the National Assembly attack me, I will defend myself with every fact
and wont be intimidated. Nobody has monopoly of attack, but because of the wisdom I have gathered over the years I will continue to do the job with wisdom.
Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Yemi Adeoye Oscarline Onwuemenyi Franklin Alli Amaka Abayomi Ebele Orakpo Ifeyinwa Obi
-
Group Business Editor Acting Finance Editor Energy Editor Head, Capital Market Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Capital Market Reporter Capital Market Reporter Energy Reporter Industry/Agric. Reporter Money market Reporter Energy Reporter Maritime Reporter
CONTRIBUTORS Princewill Ekwujuru Naomi Uzor Providence Obuh LAYOUT
-
Media/Marketing Industry Micro Finance Graphics Department C M Y K