Financial Vanguard by Vanguard Media Limited

JANUARY 19, 2015

APAPA TRAFFIC GRIDLOCK:

Rents crash by 50% as businesses, individuals relocate BY EDIRI EJOH, HOPE OFOBIKE, OLAITAN AYOOLA & AGNES OBIABO

he persistent traffic gridlock along the Apapa – Oshodi Expressway has forced mass relocation of businesses and individuals out of Apapa, causing property rents to crash by 50 percent. The Apapa-Oshodi Expressway links the nation’s biggest seaport, Apapa port, to other parts of the country. Hence most of the goods imported or exported are transported through this major road. The road in recent times has been rendered impassable due to traffic gridlock caused by several factors, chiefly tankers carrying petroleum products, which converge on the road in their hundreds to load products from the various petroleum tank farms located within and around Apapa city. Vanguard gathered from visits to some residential areas in Apapa that a three bedroom flat along Warehouse Road now goes for N250, 000 per annum instead of N500, 000; a four unit of three bedroom flats along Liverpool Road goes for N2.5 million instead of N5 million per annum; while a four bedroom flat with three toilets at Alhaji Kareem Street costs N400, 000 as annual rent. Also, a two bedroom flat at Apapa Ajegunle goes for N120, 000 as rent per annum. Speaking on the sharp reduction in rent, a real estate agent who operates from Warehouse Road, Oni Seun told Vanguard that landlords in the area decided to reduce their rent as a way of attracting new residents to the area. He said: “Tenants are packing out, no one is ready to relocate to this area, and the traffic has thoroughly affected our business. Prior to this time, we rent out a three bedroom flat for N500, 000 to N600,000, but right now, it goes for N250, 000 and yet people are not ready to settle here. Most houses in

Lagos - Oshodi Apapa Exressway traffic gridlock. PHOTO: AKEEM SALAU

this area are vacant; we have a lot of office spaces to rent out. I am using this opportunity to call on the federal government to come to our aid because we are going through hell.” Residents allege neglect Residents and business owners have continued to lament the unwillingness of the federal government to re-invest the money made into expanding and modernizing the Apapa port, despite millions of naira being realized daily from the port. They blame the government,

petroleum tanker drivers and Julius Berger Construction Company for the persistent traffic. A resident of No 5, Point Road, Emeka Mbah, who spoke to Vanguard said: “Since reconstruction work started at Berger Yard- Mile 2, we have been through agony, I have to trek a long distance or use Okada (commercial motorcycle) from here to Coconut bus stop where my business is located. Hoodlums have also seized the opportunity to attack innocent people at gun point. The presence of these tanker drivers has also led to the rise of refuse and human waste that

ravage the road and the drainage system, resulting to a disruption in the free flow of water. “We seldom have good diet without it being contaminated from the unwholesome activities of these tanker drivers who defecate, drop refuse on the streets and drains in the areas. There is no public toilet made available by the tank farms to help arrest these issues that is dangerous to the human health and the environment.” Continues on page 22 C M Y K

22 — Vanguard, MONDAY, JANUARY 19, 2015

Cover Story

VOCATION AND TECHNICAL EDUCATION – A KEY TO IMPROVING NIGERIA’S DEVELOPMENT. PART 4

DIALOGUE - From left: Tony Elumelu, Chairman, Heirs Holdings Plc; Alhaji Aliko Dangote,President Dangote Group; Jim Ovia, Chairman Zenith Bank Plc; Dr.Ngozi OkonjoIweala,Minister of Finance and Folusho Philips,Chairman,Nigeria Economic Summit Group(NESG),at the Breakfast Dialogue with Coordinating Minister of the Economy, Dr.Ngozi Okonjo- Iweala,tagged’ 'State of the Nigerian Economy in 2014 and the Outlook for 2015’’, held in Lagos. Photo Lamidi Bamidele

Rents crash by 50% as businesses, individuals relocate Continues from page 21 Traffic threatens business Business owners have continually groaned over losses they incur by the gridlock. Those who spoke to Vanguard allege that the situation has radically reduced patronage in business, leading to drastic reduction in their profit. Michael Banama, Administration Manager, Makson Maritime Ltd, lamented losses incurred so far by importers who pay demurrage on trucks which are not removed. He said: “As a result of this gridlock, our importers have had to part with accumulated billings of demurrage. To the officers at the port, it doesn’t matter what stalls your truck from leaving the port, as long as it passes the required exit charge paid, you would have to pay another charge and so it continues. Despite the benefit we get from the proximity to the port in Apapa, our clients loose more than they gain in the freight forwarding business.” On his part, Electrical Engineering Officer, Solar House, Ernest Okwegwa, said: “The gridlock is a terrible one and has increased the cost of doing business. Before now we never had to worry about customers coming to pick up their product on time, but now there is additional cost of receiving the products. The process now involves the company going over to supply customers who purchase product because of the difficulties encountered when coming to get these products already paid for.” C M Y K

Vanguard also gathered that a number of banks and industries recently shut down most of their businesses and have them relocated to a more traffic-friendly area. N1bn generated daily Meanwhile, a senior Customs officer who spoke on condition of anonymity, said the Nigeria Customs Service generates over N1 billion daily, which is channelled into the Federal Government’s account. According to him, Nigeria Ports Authority (NPA) along with other federal government agencies, concessionaires, the Lagos State government and Apapa Local Government rake in over N100 billion monthly. “There are multi-million naira businesses located in Apapa, which include 56 petroleum tank farms, three major ship berthing port complexes, dry ports, scores of filling stations, among others that are all

As a result of this gridlock, our importers have had to part with accumulated billings of demurrage

situated in Apapa. Apart from the Lilypond, which is a dry port, Apapa Port complex, Tin Can Island Port and Kirikiri lighter terminal are multibillion dollar investments that generates billions of naira in revenue daily for government and private investors. Apapa Port complex houses various agencies like the Nigeria Customs Service (NCS), Nigerian Ports Authority, NPA, Nigerian Maritime Administration and Safety Agency (NIMASA), Standard organization of Nigeria (SON), National Agency for Food and Drugs Administration and Control (NAFDAC), freight forwarders, Port Police, Naval jetties, among others,” he said. Way forward In his reaction, Maritime Consultant and Head Consultant of C.A. Borha Management and Economic Services, Chris Abiodun Borha, said the short-term solution to the chaotic traffic situation along the ApapaOshodi Expressway is to deploy barges to lift products from the tank farms along the route. Borha explained that government should order owners of the products and tank farms to commence evacuation of 30 percent of their stock through the waterways by the end of the first quarter of 2015. He said government should further give directives to these operators to prepare to increase the quantity to 60 percent by the end of the second quarter. He said: Continues on page 23

he focus is on the roles of technology and vocational education in enhancing entrepreneurial skills that will equip students for entrepreneurship education in Information and Communication Technology (ICT.) driven technological environment. The world has become globalized and the future prosperity depends on comparative advantage. This comparative advantage hinges on people and their technical or technological sophistication. Towards this, some crucial entrepreneurial and technical skills needed by the students in colleges of education (technical), polytechnics and universities to meet the trends in a global economy is analyzed. Technology education is to be considered as the key agent of technology development, either as a way of developing human capacity, increasing the shield work force for modernization, industrialization, environmental development or as a matter of personnel freedom, developing capability and empowerment. Technology education is increasingly recognized to be central to both the origins of technological development and challenges and to the prospects for successfully dealing with them (Alam, 2009). Decision makers at all levels, need timely, reliable access to knowledge generated by technology and technical education to introduce rational policies that reflect a better global understanding of complex technical, economic, social, cultural and article issues concerning the society, and our environment. Technical decision making and priority setting is an integral part of overall development planning and formation of technology development strategies. Above all, technology education is a human right and, as such, should receive priority in the allocation of national resources. It has become very necessary not to only keep technology education bound to the role of manufacturing skilled manpower but also to economic development and global economy. In Nigeria,

technology education was previously not seen as fundamental for national development, or for the economic development, but for the school dropouts, and other social and political development within the nation and for individuals. Hallak (1990) argues that technology education is also linked to human resources development and that this has an impact on more than just economic growth, but also an impact on the wider development of individuals and societies. According to him, it contributes to: (a). Individual creativity, improved participation in the economic, social and cultural roles in society. (b). Improved understanding of an individual and heir respect for others, thus promoting

Individual creativity, improved participation in the economic, social and cultural roles in societ social cohesion and material understanding (c) Improvement in health and nutrition. (d). Improved chances of economic development. (e). Improved technological development. (f). Socio-cultural change. (g). Democracy and equality (h). Ecological development/quality of life (increasing people’s awareness of their environments). From our analysis so far, it is clear that modernization and economic development, depends on investment and appreciation of modern trends in technology education. According to Woodhall (1997) investment in technological education and training produces benefits for the individual and for society as whole.

Vanguard, MONDAY, JANUARY 19, 2015 — 23

Business & Economy BALOGUN INFERNO:

BY PRINCEWILL EKWUJURU

ona Agro Allied Foods Limited has called on the federal government to ban importation of biscuits and other snack products. Mr. Subramanian Murugesan, Managing Director of the company, made this call at a press briefing on the company ’s strategic business plans for 2015, saying the importation of snack foods into the country is threatening the local food manufacturing sector. He said that sustaining local snacks food production in Nigeria requires that the federal government curtail importation of snacks food p r o d u c t s . He said manufacturers expect lots of support from government both at the federal and state levels, particularly as the manufacturing sector experiences more of the problem of supply of goods, high priced energy input and infrastructure development, unreliable supply chain management alongside other logistics. He stated that his company alongside other manufacturers expect availability and correctly priced raw materials of sufficient quality and quantity locally. Murugesan also called on the government to make

Lagos traders blame insurance companies for loss BY HOPE OFOBIKE

BRIEFING - From left Dr Yakubu Bashorun, Permanent Secretary, Ministry of Agriculture and Cooperatives, Lagos State; Prince Gholahan Lawal, Commissioner and Dr Jide Idris, Commissioner for Health Lagos State during a press briefing on the resurgence of Bird Flu in Lagos State organised by Ministry of Agriculture and Cooperatives in Lagos.

Sona Agro calls for ban on importation of biscuits, others provision for a cheaper mode of transportation like railway. Also speaking, Managing Director of Sona Industrial Gases Limited, Venkata Katikala, said that the gas industry is faced with several challenges including high rate of Customs duty and cumbersome procedure for

clearance of imported materials. He said: “We have lots of difficulties clearing consignments at the ports; there are lots of delays and difficulties. It takes hardly three to four days to clear consignments in other parts of the world, in Singapore, it

Delta needs sustainable economic blueprint —Okonta

Chartered Accountant and former Chairman Institute of Chartered Accountants of Nigeria, lCAN, Abuja District Chairman, Chief Fred Okonta, has urged relevant stakeholders and leadership in Delta State to pursue a strategic programme that could lead to the development of sustainable economic blueprint for Delta State.

The seasoned Accountant lamented that despite the strategic location and potentials of the state, its huge potentials are yet to be realised. He stated that Delta State has all it takes to develop like Dubai if necessary political will and good leadership are put to play to harness its vast resources. The fall in oil prices, he posited, should be a wake-up call for relevant stakeholders to diversify the State’s huge

resources and look beyond oil which high volatility has now become a threat to relevant countries all over the world. According to him, the crash in oil prices is a challenge for the leadership of Delta State, one of the largest oil producing states in the country to re-strategise for a future in which the states can depend less on oil proceeds.

takes 24 hours. “We are faced with lots of difficulties clearing our goods. In Nigeria it takes four to six weeks to clear our consignments from the port, in addition to that, the recent strike at the port also placed lots of strain on the industry as we even have to pay demurrage for the delay even though the fault is not ours.”

In Nigeria it takes four to six weeks to clear our consignments from the port

he Coalition of Markets and Traders Association in Lagos (CMTAL) has said that unwillingness of insurance firms to insure small businesses have contributed to huge losses incurred by members of the association during the fire incident. The group was reacting to the fire incident that gutted the popular Balogun market last Monday and destroyed goods worth billions of naira. The group consists of four different market associations namely: Association of Igbo in Commerce (AIC), Traders Rights Protection Initiative (TRIP), Amalgamated Traders Association, Lagos (ATAL) and The Market Leaders Association of Nigeria (TMLAN) and over 120 markets in Lagos. While answering questions from Pressmen at the end of its extra-ordinary meeting held in Lagos, Chairman of the Association of Igbo in Commerce (AIC) Mr Nnamdi Nwigwe alleged that no insurance company is ready to come to the aid of market men and women. “Right now, no insurance firm is ready to insure our wares, they go to mega plazas and big businesses to get their wares insured, that is why we suffer more. If we had our goods insured, traders won’t lament when incidents like this occur” Nwigwe also blamed the Lagos State Fire Service, and the Local Government officials for the damages incurred by the traders who lost their goods in Balogun

Cover Continues from page 22 “The short-term solution is that the traffic for the evacuation of products must be diversified from land to water. It can be specifically directed that by the end of June or the first quarter of the New Year, 30 or 40 percent of the petroleum products from Apapa must be loaded on barges. “You do not need deep dredging for that and it is going to generate coastal trade. But for the roads, it has

Rents crash by 50% as businesses, individuals relocate been there before and nobody is re-inventing the wheel, everybody should have a functional trailer park where you can call in those you need when you need them. So, it is when you need them that they leave their park and go to the port. Thirdly, there was a World Bank study that was pin-

pointing this off-dock terminal close to Ijora (Lilypond) as the best location for the trailer park, the one being operated by Mearsk Line and Mearsk has said that they want to give up Lilypond. So, what needs to be done is to take a critical look at Lilypond for it to be converted to this modern day

trailer park, so that these oil tankers can leave the road. If we can evacuate 70 percent of them off the road, then tarring of the roads, traffic management will become visible but if you have not actually taken the big reasons out, you cannot eliminate them completely or be able to

contain them.” He noted that the long term solution is to fix the pipeline between Lagos and Mosimi where the storage facility for petroleum products used to be. The former chieftain of the Nigerian Ports Authority, NPA, explained that if this is done, by the end of the year the problem of traffic congestion in and around the port town of Apapa will be a thing of the past.

24 — Vanguard, MONDAY, JANUARY 19, 2015

Business & Economy

Nigeria may lose cargo to neighbouring ports — MAN BY OLAITAN AYOOLA

anufacturers Association of Nigeria, MAN, has said that Nigerian ports may loose more to neighbouring ports in 2015 if terminal and shipping charges are not reviewed. The Chairman Corporate Affairs and Strategic Committee of MAN, John Aluya,who stated this in Lagos, explained that the Nigeria ports may lose more to neigbouring ports and that unless terminal operators and shipping companies are checked properly, their exorbitant charges will cause a lot of havoc to the nation’s economy. According to him, “Except the terminal operators and shipping companies are properly checked through strong political will of the government, they will do a lot of havoc to the nation’s economy.” He noted that apart from the efforts of the port regulatory body to ensure that the cost of shipping service were checked, the federal government must demonstrate enough political will to get the shipping service providers to comply with international standards of shipping business. Aluya, who also noted that

P&G introduces Fairy dishwashing liquid

ishwashing liquid, Fairy is now available in Nigeria, courtesy Procter & Gamble, P&G the leading consumer goods company behind other household name such as Ariel. P&G has also revealed Iretiola Doyle, a TV personality, as the face of the brand. The Fairy brand was first launched in the UK over 50 years ago, and today it is the number one dish care brand globally. “Nigerian consumers will be the first in sub-Saharan Africa to experience the Fairy quality – the same top performing product that is trusted by consumers in the UK and in over 80 other countries worldwide,” said George Nassar, General Manager of P&G Nigeria.

C M Y K

We've not withdrawn MTEF – FG BY EMMANUEL ELEBEKE

he Minister of F i n a n c e and the Coordinating Minister of the economy, Dr. Ngozi Okonjo Iweala, has denied a report in the media which stated that the Ministry had withdrawn the medium term expenditure framework, MTEF from the National Assembly. The Minister debunked the report at the launch programme of a global movement for eradication of extreme poverty, Action/ 2015. She described the report as baseless and as a figment of peoples’ imagination and urged Nigerians to ignore such rumour. Dr. Iweala said both the MTEF and the 2015 budget were still with the National Assembly waiting for consideration and that the

COMMISSIONING - From left: Olusola Oworu, Hon. Commissioner, Commerce & Industry, Lagos State; Fola Adeola, Chairman, MainOne; Omobola Johnson, Hon. Minister of Communications Technology and Funke Opeke, CEO, MainOne at the launch of MainOne’s new Tier III Data Center, MDX-i Ministry is ready to work with the law makers collaboratively when they are through with the documents to enable them come up with sound and sustainable budget.

“There were reports that the MTEF was withdrawn from the National Assembly but the MTEF was never withdrawn. The National Assembly is still

Turkish firms seek investments in Nigeria By FRANKLIN ALLI

urkish companies are seeking to expand their investments in Nigeria and other African countries through franchising. Accordingly, a Memorandum of Understanding (MoU) has been signed between Soysal, to link business interest in Nigeria and other West Africa countries interested in doing business in Turkey or Turkish businessmen who are interested in establishing business presence in Nigeria, and other Africa countries. Soysal is a Turkish training and consultancy company and convener of Retail days (Conferences) while Bervidson International Limited is a member of Bervidson Group, one of the training and consultancy group in West Africa. Mr. Joseph Ebata, CEO, Bervidson, signed on behalf of his company while Mr. Suat Soysat, CEO Soysal Ltd, signed on behalf of his organization. According to the agreement, Bervidson will facilitate the process of engagement of Nigerian companies and senior individuals with Turkish companies seeking to

establish their presence in retail and retail related industries in Nigeria and other African countries through partnership or franchising, as well as facilitate the process of direct investment of Turkish companies in retail and retail related industries in Nigeria and other African countries. On the other hand, Soysal will facilitate introductions of companies and senior individuals within the retail sector, through its long established network of retail

and retail related industries, fast moving consumer goods, FMCG producers and clothes manufacturers’ contacts in Turkey to Bervidson. The MoU further stated that where possible or whenever potential relationships or projects are identified, so that Bervidson can be introduced and promoted as finding/ being master franchisee/ partner and/or consultancy for Nigeria and other African Countries where Bervidson can give these services.

with the budget and they are considering it. “When they are ready we will work very collaboratively together and I am sure we will work together with them to have a sound and sustainable budget. “ We all need to wait, to see what the oil prices are going to be but be rest assured that we are preparing defense scenario for the falling oil price to be able to manage the economy at whatever level the oil price falls to,” the CME said. On the falling price, she said, measures were being put in place to enable federal government manage the economy in a most prudent and judicious manner. “Even though, the price of oil is still going down, the budget is still with the National Assembly.

LCCI flays budgetary provision for petroleum products subsidy BY NAOMI UZOR

agos Chamber of Commerce and Industry, LCCI, said weekend, there’s no justification for budgetary provision by the Federal Government for petroleum products subsidy. In a parley with pressmen on the 2015 appropriation bill of the Federal Government and the current economic situation, the President of LCCI, Alhaji Remi Bello, said, the biggest burden on

government treasury in the country is the appropriation for petroleum subsidy. “In 2015 budget, N200 billion was proposed as subsidy for PMS (petrol); in 2014 it was N971 billion. This is a decrease of about 80 per cent. We welcome this development. However, we note the provision of N91 billion for kerosene subsidy in 2015. We submit that provision of this sum is difficult to justify. Besides the global oil price dropping to below $50 per barrel, there’s no

justification for budgetary provision for petroleum products subsidy,” he said. He urged the National Assembly to take this into account in its deliberations on the 2015 Appropriation Bill as times like these call for utmost prudence and curbing of leakages. On the appropriation of debt service, Bello said, the chamber is deeply concerned over the growing budgetary appropriation for debt service as the amount has grown from N712 billion in 2014 to N943 billion in 2015.

Vanguard, MONDAY, JANUARY 19, 2015 — 25

Banking & Finance

Crude oil price fall will force economic restructuring —Agbaje BY BABAJIDE KOMOLAFE

he sharp decline in the price of crude oil will force policy makers in Nigeria to restructure the economy. Senior Consultant/Chief Executive Officer, RTC Advisory Services Limited, Mr. Opeyemi Agbaje said this, while speaking at a forum titled: “Review of 2014 and Projections for 2015,” organised by the Finance Correspondents Association of Nigeria (FICAN), in Lagos. He said, “This is the type of restructuring whereby you don’t have any choice, but to do it. Analysts and columnists have over the years been advising on most of these things, but now we don’t need to advise anybody. “Whether government likes it or not, we will have to deal with the issue of the Nigerian economy. We would have to diversify the economy, reduce the size of government and increase investment in alternative sectors whether we like it or not. “The oil price is still falling and we don’t know where the exchange rate is heading to. “But the reality is that whoever wins the election by February 14, 2015; and whoever comes into office by May, will have to deal with serious economic issues. “The implication of higher exchange rate, higher interest rate, lower GDP growth, is lower consumption and lower purchases of goods and services.

For the private sector, this is the era in which managers will actually earn their pay because they are going to now have to do their job “So, there are also possibilities of labour issues because both in private and public sector, there may be an inclination towards job losses. So, the outlook is going to be difficult. It is going to be a challenging outlook for

managers both in the private sector and in government. “For the private sector, this is the era in which managers will actually earn their pay because they are going to now have to do their job. There is significant uncertainty across

variables. “Now, there is nothing that can be taken for granted. People have to plan for interest rate, sales volume, exchange rate, political scenario and every other thing. There is a high level of uncertainty. “My description of where Nigeria is in 2015 is multiple crossroads. So, we are at a junction in which there different roads. It is a potential explosive combination of political risk, economic uncertainty and a seeming social crisis. It is not the place a country want to be in 2015. Essentially, this is an era that would challenge the acumen of managers in the private sector and in the government.”

PROMO - From left: Mr. Kehinde Ogundipe, Regional Head, FCT/North Central; Ecobank Nigeria; Mrs. Osinuga Mofoluwaso, Product Manager, Liability Product, Ecobank Nigeria; Mr. Kayode Ojoogun, Senior Manager, National Lottery Regulatory Commission (NLRC); Mr. Shehu Jafiya, Executive Director, FCT/North, Ecobank Nigeria and Engr. Shamm T. Kolo, Deputy Director, Surveillance and Enforcement, Consumer Protection Council (CPC) at the Ecobank Giant Prize Giveaway promo regional draws held in Abuja on Tuesday

AfDB, CSOs partner to enhance development in Africa

he African Development Bank has initiated a partnership with Civil Society Organizations (CSOs) aimed at enhancing development in Africa. To this committee comprising the African Development Bank and Civil Society Organizations (CSOs) has been re-launched to discuss a work plan, modalities of its implementation as well as an accountability structure, for engagement between the Bank and CSOs. The Committee was relaunched after a two day meeting where both partners agreed to identify implementable actions necessary to fulfill the mandate and prepare a charter that will provide details of the nature of the

collaboration, including responsibilities. “CSOs are our integral partners especially in the promotion of accountability, transparency and good governance. Accountability is key in terms of achieving our objective, and we could certainly do with an external reporting tool especially from CSOs,” Rakesh Nangia, Chair of the committee, said as he opened the meeting on January 14 at the Bank’s headquarters in Abidjan, Côte d’Ivoire. Addressing the participants, who included regional civil society heads and representatives of key sectors within the Bank, he reiterated the importance of strengthening engagement with CSOs. “The Bank recognizes and values the

expertise and contributions of CSOs, which are essential in achieving sustainable development in Africa,” said Nangia, who is also the Evaluator General of the Bank’s Independent Development Evaluation department (IDEV). His remarks were echoed by Mamadou Goita, Chair of the Civil Society Coalition, who described the role of civil society as crucial in helping the Bank to frame projects that would be more relevant to communities. “We need to be involved from the first stage of designing a project because we know the context of our various communities. We can then help follow through to the implementation, monitoring and evaluation stages,” Goita said. He cited the recent Ebola

response saying civil society organizations would have been approached to help in framing the nature of the Bank’s assistance. “We are the ones on the ground and we know the specific needs on the ground; if it is support in getting skilled care, drugs, or even building new hospitals, among others.” In August last year, the Bank approved a US $60-million grant to help strengthen West Africa’s public health systems in a bid to address the Ebola crisis. The issue of engaging with CSOs from fragile states came into focus with recommendations of sustainable funding and longterm institutional development of the organizations, including capacity building.

Ecobank promo produces more winners E

cobank Nigeria’s Giant Prize Giveaway promo has produced another set of winners, who smiled home with various prizes including inverters, IPAD Air, Samsung smart Phones; air-conditioners, generating sets, LED Televisions, mobile phones and washing machines being their winning gift during the second draw of the promo held in Abuja last week. The lucky winners when contacted on telephone were full of excitement and commendation for the bank, promising to be ambassadors of the bank’s desire to reward customers’ loyalty. One of the winners, Okoroafor Benjamin who was presented with an LED TV at the event expressed appreciation to the bank, stating that he was attracted to do business with the bank because of its excellent customer relations. Abdullahi Abubakar, a winner of an Inverter, who operates an account in Gusau Branch, Zamfara State, when contacted on telephone said Ecobank has shown overtime that it is customer-centric bank, He prayed for the continuous progress of the bank. In his address, Executive Director, FCT/ North, Ecobank Nigeria, Mr. Shehu Jafiya, said the promo is part of the bank’s tradition of rewarding its customers for their patronage. He emphasized that Ecobank’s will continue to surpass customers’ expectations in service delivery. In his words: “It is part of our DNA to reward and celebrate our customers because they are the reason why we are in business. Apart from our excellent service delivery, we also deemed it necessary and important to always appreciate them through various initiatives such as this promo,”

26 — Vanguard, MONDAY, JANUARY 19, 2015

Banking & Finance

Banks earn N27.76bn from deposits placed with CBN •Naira depreciates further as reserve etches up BY BABAJIDE KOMOLAFE

anks earned N27.26 billion as net interest earned from placing their excess liquidity as deposit with the Central Bank of Nigeria. Meanwhile the nation’s currency depreciated in the interbank and parallel markets last week, losing an average of N2.25 kobo in both segments of the foreign exchange market. In the interbank market, the naira depreciated by N2 as the interbank exchange rate closed the week at N185.1 per dollar, up from N183.1 in the previous week. At the parallel market, the naira depreciated by N2.5 as the parallel market exchange rate closed the week at N192.5 per dollar, up from N190 per dollar the previous week. The official exchange rate however remained stable at N168 per dollar, while the CBN sold $499.25 million last week through the bi-weekly dollar sales, known as Retail Dutch Auction System (RDAS). On the other hand, the nation’s external reserve rose marginally by $16 million last week as it rose to $34.505 billion as at Thursday last week from $34.489 billion, the previous week. Banks earn N27.76bn interest : The CBN has two facilities namely the Standing Lending Facility (SLF) and the Standing Deposit Facility. Banks access the SLF to borrow from the CBN while they access the SDF to place deposit with the CBN. Presently the CBN charges 15 percent as interest rate on loans to banks through the SLF while it pays 11 percent as interest on deposit placement through the SDF. Vanguard investigations reveal from October 2013 and September last year, banks placed N81.85 trillion as deposit with the CBN through the SDF and borrowed N5.14 trillion through the SLF. Further, the CBN paid interest of N32.9 billion on the deposit through the SDF, while it earned interest of N3.68 billion on loans to banks through the SLF. While, the N81.85 trillion placed as deposits with the apex bank within this period revealed the severity of the problem of excess liquidity in

the banking system, while the net interest of N27.76 billion earned by banks reveals why banks prefer to place deposit with the apex bank rather lend to the economy. On the average, banks placed more than N300 billion with the CBN on a daily basis with the apex bank during this period. To check this trend, the CBN in November last year, limited banks daily placement through the SDF to N75 billion with interest payment of 10 percent. The apex bank said that it would not pay interest on deposits above this limit. The CBN in a circular issued on November 6th said, “It has been observed that banks and discount houses have preferences for keeping their idle balances at the Central Bank in the standing Deposit Facility (SDF) thereby constraining the process of financial intermediation. “In order to encourage the banks to increase lending to the productive sector of the economy, the guidelines for the operations of SDF is hereby reviewed as follows: The remunerable daily placements by banks and discount houses shall not exceed N7.5billion. This shall be remunerated at the SDF rate of 10 percent per annum.” Quarterly Analysis : A quarterly analysis of

lending and deposit place cements through the SLF and SDF reveal that in the last quarter of 2013, “The total Standing Lending Facility

Banks placed N81.85 trillion as deposit with CBN through SDF and borrowed N5.14 trillion through SLF (SLF) granted during the review period was N1,445.54 billion with a daily average of N24.09 billion in the fourth quarter of 2013, compared with N5,757.88 billion in the preceding quarter, indicating a decline of 74.9 per cent. Interest paid on SLF in the fourth quarter of 2013 stood at N 0.87 billion. “Total standing deposit

facilities (SDF) granted during the review period was N18,088.37 billion with daily average of N301.42 billion, compared with N14,368.61 billion granted in the third quarter. The cost incurred on SDF rose by 26.5 per cent to N7.12 billion, compared with N5.63 billion in the preceding quarter.” In the first quarter of 2014, “The total Standing Lending Facility (SLF) granted during the review period was N3,169.26 billion with a daily average of N51.12 billion in the first quarter of 2014, compared with N1,445.54 billion in the preceding quarter, indicating an increase of 119.2 per cent. Interest paid on SLF in the first quarter of 2014 stood at N1.70 billion, compared with N0.87 billion in the preceding quarter. “Total standing deposit facilities (SDF) granted during the review period was N24,037.26 billion with daily average of N387.7 billion, compared with N18,088.37 billion granted in the fourth quarter of 2013. The cost incurred on SDF rose by 32.3 per cent to N9.42 billion, compared with N7.12 billion in the preceding quarter.” In the second quarter of 2014, “ Total request for the standing lending facility (SLF) was N197.81 billion with a daily average of N3.35 billion for the 59 working days in the second quarter of

2014, compared with N3,169.26 billion in the preceding quarter. The SLF request in the review period was N2,971.45 billion lower than the value in the preceding quarter. The total interest earned on SLF in the quarter stood at N93.46 million, compared with N1.70 billion in the preceding quarter. “Total standing deposit facility (SDF) granted during the review period was N21,756.73 billion with daily average of N368.76 billion in the review quarter, compared with N24,037.26 billion granted in the preceding quarter. The cost incurred on SDF in the quarter stood at N9.01 billion, compared with N9.42 billion in the preceding quarter.” In the third quarter of last year, “Total request for the standing lending facility (SLF) granted during the review period was N327.38 billion with total interest earned amounting to N175.31 million, compared with the total request of N198.19 billion and total interest of N93.89 million in the preceding quarter. Total standing deposit facility (SDF) granted during the review period was N17, 960.61billion, while the cost incurred stood at N7.35 billion compared with the request of N22,293.91 billion and total interest of N9.32 billion in the preceding quarter.”

Vanguard, MONDAY, JANUARY 19, 2015 — 27

Corporate Finance

SEC redeploys staff

COMMISSIONING - From left: Mr. Mezuo Nwuneli, Chairman, AACE Foods; Prof. Olugbenga Ogunmoyela, Board Member; Ms. Nnenna Onyewuchi, Board Member; Mrs. Ndidi Nwuneli, Board Member; Mr. Temi Jebutu, Board Member and Rtd. General Tunde Reis, Board Member at the Commissioning of the AACE Foods Factory at Sango Ota, Ogun State. By NKIRUKA NNOROM

he Nigerian Stock Exchange, NSE, has said that the securities lending and market making activities introduced to boost stock market activity and inject liquidity into the market performed beyond expectation in 2014. The Chief Executive Officer of the NSE, Mr. Oscar Onyema, expressed the regret while reviewing the performance of the capital market in 2014 and making prognosis into the New Year. Securities lending is the market practice of temporarily transferring securities, for a fee, from the holder (the lender) to another party (the borrower), with the borrower agreeing to return the securities to the lender either on demand or at the end of the agreed loan term. This practice usually requires the borrower to collateralize the transaction with cash or other securities of a value equal to or greater than that of the lent securities, in order to protect the lender against counterpart credit risk. Securities lending plays an important role in capital markets by providing liquidity, which in turn reduces the cost of trading and promotes price discovery. Market Making on the other hand, is the act of entering bid and offer prices in the automated trading system for a specified security. The primary role of a market maker is to maintain a fair and orderly market in its particular securities of responsibility and, in

Securities lending, market making performance disappointing – NSE general, to contribute positively to the operation of the overall market. In 2012, the NSE commenced marketing making activity with appointment of 10 market makers with the sole aim of stabilizing and boosting liquidity in the market and later appointed another 13 supplementary market maker as supplementary liquidity providers. A year

after in 2013, three agents – Stanbic IBTC , UBA, Capital

Primary role of a market maker is to maintain fair and orderly market in its particular securities of responsibility

Bancorp and First Bank were appointed as securities lending agents with the hope that securities lending would make the market making more active vibrant. However, Onyema told journalists during the review that both products have not performed optimally due to low level of interest by operators and investors, which had resulted in minimal uptake.

Seplat secures $1bn debt re-financing

eplat Petroleum Development Company Plc has announced the successfully refinancing its existing debt facilities with a new US$700 million seven year secured term facility and US$300 million three year secured revolving credit f a c i l i t y . The seven year facility, according to a statement from the company, also includes an option for it to upsize the facility by up to an additional US$700 million for qualifying acquisition opportunities. The company noted that the US$700 million seven year secured term facility has been closed with a consortium of banks in Nigeria comprising First Bank of Nigeria Limited, Stanbic IBTC Bank Plc, United Bank for Africa Plc and Zenith Bank Plc, and is repayable quarterly from end June 2015 and has a margin of LIBOR +8.75 percent per annum. It added that the US$300 million three year revolving credit facility has been closed

with a consortium of eight international banks comprising Bank of America Merrill Lynch, Citibank, JP Morgan Limited, Natixis, Nedbank Limited, Rand Merchant Bank, Standard Bank and Standard Chartered Bank. the US$300 million three year revolving credit facility also has a quarterly reduction schedule from end December 2015 and has a margin of LIBOR +6.00 percent per annum. “Proceeds from draw down on these new facilities has been used to repay the company’s existing debt facilities (totaling US$552 million), and will also be used to fund new business and development opportunities and for general corporate purposes,” Seplat said. At the company’s operations, net working interest production for full year 2014 as measured at the LACT unit (subject to final reconciliation) has averaged approximately 24,248 bopd and 39.4 MMscfd (approximately 30,819 boepd), in line with full year 2014 guidance of 29,000–33,000 boepd.

he Securities and E x c h a n g e Commission, SEC, has embarked on redeployment and transfer of its workforce in order to strengthen the commission for better performance. In a statement to Vanguard, the commission said that the redeployment, which affected key divisions such as, Investigation, Enforcement, Investor Education and Financial Literacy, was strategically done to strengthen the regulatory mechanism of the commission through efficient handling of complaints from the investing public, timely use of enforcement machinery where necessary on erring capital market operators and improvement on investor education. It added that undertaking the exercise, especially at the beginning of a new was not aimed at punishing or victimizing any staff due to his or her loyalty to some individuals as being insinuated in some quarters; instead it is for the overall interest of the market .

Citi profit plunges on legal settlements, fall in bond revenue

itigroup Inc said its quarterly profit dropped 86 percent, hurt by legal settlements and falling bond trading revenue, sending the bank’s shares down more than four percent. The bank took $3.5 billion of charges for legal settlements, matching the figures foreshadowed by Chief Executive, Michael Corbat, in December. But a 16 percent drop in fixedincome trading revenue was steeper than many analysts had expected, and earnings fell short of analysts’ estimates. Citi suffered on a number of fronts during the quarter. The bank, which gets about half of its revenue from overseas, took a hit from the strong dollar, for example. The bank also posted a loss from assets it took on before the financial crisis. The profit setback comes as the Federal Reserve considers the bank’s plan to return capital to shareholders, through some combination of share buybacks and dividends.

28 — Vanguard, MONDAY, JANUARY 19, 2015

Corporate Finance

Goldman hit by weak fixedincome, investment banking revenue

oldman Sachs Group Inc reported a 7 percent drop in quarterly profit as investment banking revenue slid and an unexpected bout of market volatility in December hit revenue in its business that trades bonds, currencies and commodities. Goldman’s net income fell to $2.17 billion, or $4.38 per share, in the fourth quarter from $2.33 billion, or 4.60 per share, a year earlier. Analysts had expected earnings of $4.32 per share, according to Thomson Reuters. Investment banking revenue fell 16 percent to $1.44 billion, while revenue in the bank’s division that trades bonds, currencies and commodities - a traditional strength for Goldman - fell 29 percent to $1.22 billion. Excluding gains related to repayment of debt and the sale of a majority stake in the firm’s European insurance business in 2013, revenue in that division fell 19 percent. “Looking ahead, we see evidence of a continued pick up in momentum for the global economy that will improve the opportunity set for 2015,” Chief Executive Lloyd Blankfein said in a statement. Goldman Sachs shares were down 1.5 percent in premarket trading on Friday.

Euro bonds rally, shares sink in Swiss after-shock

he shockwaves of Switzerland’s move to ditch its currency cap were still being felt on Friday, as investors made a fresh grab for top-rated government bonds, and world shares and commodities headed for another week of losses. The Swiss franc dipped after Thursday’s surge, but Swiss shares were again Europe’s worst performers as stocks worldwide limped to their third week in the red. The fragile risk appetite meant more record low yields for German and other core euro zone government bonds, while there were falls in Greek markets as it emerged two of its banks had requested emergency ECB funding aid.

TRAINING - Group photograph of participants at an In-House training programme on Effective Budgeting & Cost Control , for Hercules Offshore Limited, facilitated by BusinessDay Training, held in Warri, Delta State.

FG, market operators open dialogue on 2015 budget BY PETER EGWUATU

apital

market operators under the aegis of the Chartered Institute of Stockbrokers, CIS , Association of Stockbroking Houses of Nigeria,(ASHON) and Association of Issuing Houses of Nigeria (AIHN) have initiated a special dialogue with the Federal Government and key stakeholders in the economy to ensure proper alignment of the capital market to Nigeria Fiscal and Monetary policy implementation. The first in the series is the One-Day Dialogue with the theme: “The Capital Market and the 2015 federal budget. Commenting on the dialogue, the President, Chartered Institute of Stockbrokers’ (CIS) Mr. Albert Okumagba said it would strengthen the connection between the capital market and the economy, re-establish the capital market as the key driver for the Nigerian economic growth and development, open-up opportunities that could increase the market size from its current eleven trillion capitalization to one hundred trillion within the next three years and effectively reinforce the Federal Government’s plan to explore various sectors of the economy for economic development. The critical areas of concentration shall include diversification and dualisation of the commodity exchange in such a way that serious investors can drive commodity exchange while the Federal Government can be allowed to hold on to the existing Commodity Exchange. “This diversification will help the

The dialogue is to discuss how the capital market can partner with FG in raising funds to finance the 2015 national budget

operators in the private sector to own their commodity exchange. Over-the-Counter market would also be given adequate attention as the dialogue shall provide a platform to appreciate it’s

benefits to the Nigeria economic development”, Okumagba said. Corroborating Okumagba, the President, ASHON, Mr Emeka Madubuike said the rationale for the dialogue was to discuss how the capital market can partner with the Federal Government in raising funds to finance the 2015 national budget. According to Madubuike, the forum would articulate why the capital market should be central to all economic development activities in Nigeria. ASHON’s General Secretary, Mr Akin Akeredolu-Ale explained that Nigeria runs a mono-income economy; hence, the dialogue is intended to discuss measures for effective diversifications of the entire

economy. Akeredolu-Ale noted that the dialogue would sensitize the government on the need to galvanize the private sector into financing the diversified economy and provides alternative means of funding the budget. According to him, the critical areas of concentration would include Agriculture, Oil and Gas, Infrastructure financing such as power assets and telecommunication. On the role of the Issuing houses in the scheme of things, Okumagba said they would begin to identify the problems and take the solutions to the investors. He stated that the market would become bigger and accommodate more investment opportunities. “The Capital Market is the

Rencap forsees merger, acquisition & indigenisation policy in Africa wave of consolidation in the BY PETER EGWUATU

enaissance Capita, Rencap has disclosed that it forsee mergers and acquisition, major funding, and indigenization policy taking place in African in 2015. In its report tagged African oil & gas, key themes in 2015" Rencap said “We provide our outlook for key themes in the African oil & gas sector and our top picks in 2015, and revise our Trading Prices, TPs for the stocks under our coverage on the back of our updated outlook. We focus on defensive qualities and view Seplat as best positioned in the volatile oil market environment. We expect Merger and Acquisition, M&A , funding, and indigenisation to be the three key themes in 2015. We upgrade Eland Oil & Gas and Mart Resources to BUY (from Hold) and

downgrade Africa Oil to HOLD (from Buy). We have lowered our TPs by an average of 36%.” Defensive positioning: In the more volatile and weaker oil price environment, we focus on defensive qualities in our stock selection process. Balance sheet strength, robust funding and cash flows should be the key qualities of future beneficiaries in the sector, in our view. We also view the ability to execute successful M&A deals and companies’ indigenous status as two additional important drivers. Key themes in 2015 : Funding, M&A and indigenisation will likely be the key themes defining sector performance in 2015. We think companies that do not rely on external markets to fund their work programmes should be relative outperformers. At the same time, a rising cost of capital and growing market discounts to NAV could fuel a

sector. We view all companies under our coverage as potential parties to various deals, which we think should help remove valuation discounts, expand asset portfolios and improve some companies’ funding position. Top picks: According t o the report “Our top pick remains Seplat (BUY, TP GBp260), given its fully funded status and improved opportunities to expand its asset base through M&A deals. For us, the market seems to be ignoring the company’s $299mn net cash position and is giving Seplat no credit for its pioneer status. Seplat is trading on FY15E 2.8x P/E and offers over a 10% dividend yield, on our estimates. We view Mart Resources, Eland Oil & Gas and Lekoil as attractive due to their strong near-term production growth and generally solid funding positions.

Vanguard, MONDAY, JANUARY 19, 2015 — 29

E-Commerce Stories by JONAH NWOKPOKU

igerians have e x p r e s s e d concerns over the lack of enabling laws for the protection of personal information provided for online businesses. They say there is cause for concern as there is no legislation for the protection of millions of personal information provided for online businesses on a daily basis. They fear that without such legislation, it is not certain that the online businesses will use the information for the sole purpose of business transactions and without interfering with their privacy. Privacy fears creeping in “Online privacy is a serious issue but no one is paying attention yet,” said Emmanuel Offie who said he uses e-commerce sites regularly.“ In fact, it is already affecting us because right now, personally I get lots of unsolicited emails and you wonder how these people get your email address. And this is not to talk of countless spam mails one receives on a daily basis,” he added. Speaking further, he said: “If one considers the level of personal data at the disposal of these online businesses; abuse is inevitable unless there are appropriate legislations that forestall their use of these data in a certain way. But you see Nigeria likes fire brigade approach, until some very bad things begin to happen, nobody will pay attention to that sector. For now, enacting a law is the only hope because all businesses are moving online and no one may be able to escape giving vital personal information out in the future.” Also speaking, Kelvin Osamehon who also patronises e-commerce sites said: “Of course I do worry about the implication of those data falling into wrong hands especially in a space like the internet where regulation is almost impossible. As a matter of fact I have had to retract some of my online transactions in the past after I became concerned that leaving my personal information in their hands was risky. So I think the bottom line is for these online business operators to do more by making sure that they remain credible and that their customers’ confidence grow in their ability to protect them even without the enabling laws.” On his part, a Computer Scientist, Charles Edosomwan said online

NigerianFoods.com offers US-based Nigerians local dishes

A MEETING - From left: Executive Director, CardinalStone Partners, Mr Michael Nzewi, Managing Director/Chief Executive Officer, Fidson Healthcare Plc, Dr Fidelis Ayebae and Chairman, Fidson Healthcare Plc, Mr Felix Ohiwerei during the completion meeting for Fidson Healthcare Plc N2 Billion Bond issue in Lagos.

E-commerce: Nigerians decry dearth of legislations companies always make provision that guarantees people’s privacy and how their personal information are going to be used. He recommends that users of ecommerce sites always go through these policies before opting in. “You know when you opt into an e-commerce company; there are always terms and conditions including their privacy policies in fine print. So, I would recommend that all those who feel concerned about their privacy and security go through the privacy policy before deciding to supply their personal information. However it is also glaring that Nigeria has not been able to come up with any cyber laws and this is because there are no regulations for the internet space. And for you to even have a cyber law there has to be a strong government body that regulates that space and play key roles in that space. This is because it is difficult to regulate the use of these data without regulating the internet in itself. So, for the online companies, without the necessary law, it now boils down to ethics. They have to subject themselves to ethical regulations to strengthen their users’ confidence in their ability to protect them.” However, when asked if Nigerians should have any concern for their privacy or could at any point have any reason to worry about their personal information in the hands of online businesses, an online business operator,

who preferred anonymity, said privacy challenge for ecommerce is certain but that it belongs to the future. Privacy, a challenge for the future He said: “The issue of privacy may not seem to be an issue in our context now as a developing country but it will certainly be in the future. This is because, as the society

Nigeria has not been able to come up with any cyber laws and this is because there are no regulations for the internet space gets more sophisticated technology wise and more people get education and escape the trap of poverty, there will increase the need for not only businesses to compete for these data not just for marketing purposes but also for profit. The amount of data you have as a business will definitely determine your bottom line. This in turn makes these businesses very powerful. Imagine what it means to have access to names, contact address and mobile phone numbers of millions of people? “So if you ask me, whether Nigerians should be

concerned? The answer is both yes and no. Yes because at some point, giving the level of hacking these days, businesses cannot be careful enough. A server breach for instance can result to massive and injurious loss of vital personal data. But then this means that businesses have to take extra precaution to make sure this does not happen since their reputation depends on it. “On the other hand, the answer is no because in an organised society, there is always a supreme authority that sees to everyone’s protection. And that is where the law comes in. It is important and urgent that Nigeria develops legislation to guard against any form of breach to privacy or security that may result from electronic business transactions and that these companies stick to the use of personal information for business purposes only.” The complex issues of privacy in e-commerce Privacy in e-commerce is a complex issue for most ecommerce ventures all over the world today. While these ventures may not be interested in profiling personal data, it is indeed impossible for them to operate without such amount of personal data that may sometimes trigger liability risks. In the developed countries where e-commerce has endured for sometimes, privacy issues resulting from gathering personal data for business purposes have

Continues on page 38

n online food vendor, NigerianFoods.com has launched in the United States of America to provide native dishes to USbased Nigerians. The online platform offers US-based Nigerians the opportunity to shop for variety of local delicacies on its website. Their offers ranges from flour and grains; herbs and spices; vegetables and soups; cans and oils; sweets and snacks; as well as drinks. Others include: Garri, Egusi, Chocomilo and tens of other local foods. Speaking on the initiative with journalists, Founder, NigerianFoods.com, Mr Tosin Osibodu, said that products ordered are delivered to customers quickly and conveniently. Mr Osibodu said he was inspired to venture into the local food business when he struggled to get Nigerian groceries while a graduate student in the US. He said NigerianFoods.com will solve the problem of having access to Nigerian dishes for millions of Nigerians in the US. “Some friends and I missed the taste of home, but ran out of the ingredients that we had lugged from Lagos. The closest African shop was hours from my university. We went on a long 3-hour drive and in the end, made the jollof rice and efo I was craving. It was so good! But it took so long! I thought, there must be an easier way to get Nigerian groceries in the US. I asked around and others had the same frustrations. So I started NigerianFoods.com,” Osibodu told journalists at the launch in the US. He said that, in only a few months since launch, thousands of people had already visited his webite to shop for all sorts of Nigerian foods, saying that, “NigerianFoods.com now delivers Nigerian foods everyday across America.” When asked what has made the site successful, he said, “Besides the large selection, delivery convenience and low prices have been instrumental to our success. We also care about preserving and advancing Nigerian culture.” C M Y K

30 — Vanguard, MONDAY, JANUARY 19, 2015

Homes & Housing Falling rates spur mortgage revival

he moribund mortgage market suddenly sprang back to life in the US last week after a drop in interest rates to a two year low sent borrowers rushing to lock in cheaper loans. Mortgage applications rose a seasonally adjusted 49 percent in the week ended Jan. 9 from the previous week and 30 percent from a year ago, according to data from the Mortgage Bankers Association. Application volume touched its highest level since August 2013, with most of the increase driven by borrowers seeking to refinance. The real test for the market will come in the coming few weeks. If mortgage rates continue to fall, refinancing could pick up, breathing more life into the mortgage market. It is unclear, however, whether the uptick will prove the beginning of a lasting trend. Mortgage application estimates can be volatile around holiday weeks, making them less reliable as an indicator of an underlying trend. On Wednesday, the yield of the 30-year Treasury bond fell to a record, while 10-year Treasury yields declined to their lowest level since May 2013, as weak U.S. consumer spending added to global economic worries.

Homeowners Charter: Ogun issues more C of O

gun State government has issued more Certificates of Occupancy (C of O) to property owners under its Homeowners Charter programme. Under the scheme, owners of properties without the required building approvals, or houses built on land belonging to the state government are given a window of opportunity to obtain building plan approvals, Certificates of Occupancy and other documents that will establish their ownership to the properties. The scheme ensures that all penalties and fines that are normally levied against those who build houses without approvals and Certificates of Occupancy are waived. During the exercise which was the fifth in the series of the programme, held in Abeokuta, Governor Ibikunle Amosun, represented by the Head of Service, Mrs. Modupe Adekunle, presented the documents to the beneficiaries.

Abuja among Africa’s top 6 property investment hotspots By YINKA KOLAWOLE, with agency report

buja, Nigeria’s Federal Capital Territory, has been listed as one of the top six emerging real estate investment destinations in Africa. Others are Naivasha, Kenya; Casablanca, Morocco; Jardins de Carthage, Tunisia; Ndola, Zambia and; Algiers, Algeria. Global property portal, Lamudi, compiled the list of emerging investment hotspots across the continent, based on market trends, infrastructure developments and attractive commercial, residential and industrial real estate opportunities. The report noted that the FCT is one of the worlds emerging cities. “The Federal Capital Territory continues to attract real estate investors, interested in benefiting from its array of well-developed architecture and strong infrastructure. Abuja boasts good security and a favourable climate for business. The city’s Business Zone is home to an array of multinational companies expanding their offices into the emerging market. As Nigeria emerges as an attractive investment hotspot, the outskirts of Lagos are also increasing in popularity. Areas including Epe, Ota, Agbara, and Ajah have witnessed a growth in industrial parks, and boast affordable rates whilst in close proximity to the city of Lagos,” it stated According to the report, Naivasha, which is located 90 kilometers northwest of Nairobi, has attracted a number of developers into the region. It stated that tourist attractions in and around Naivasha, such as the Lake Naivasha, Hell’s Gate, Aberdare Hills and Longonot National Park have led to the town’s development as a preferred getaway location, increasing demand for holiday homes in the area. On the other cities, the report stated: “Casablanca, Morocco’s industrial and business center is home to numerous Moroccan and international companies, taking advantage of its close proximity to Europe and international trade routes. The dynamic city is increasingly attractive to

Mass housing development

Abuja boasts good security and a favourable climate for business

Morocco’s young population, looking to settle down in a modern area with an abundance of employment opportunities. “Jardins de Carthage is an attractive option for luxury

real estate developers, and house-hunters, looking to invest in upscale property. With Tunisia’s largest airport, Tunis-Carthage located nearby, this modern, residential neighborhood has all of the necessary structures to attract foreign investors. “The booming manufacturing sector in Ndola, situated approximately 320 kilometers north of Lusaka,presents an abundance of opportunities for industrial real estate, with no signs that the demand for local manufacturing will slow. The city is the industrial and commercial center of

Zambia’s copper-mining region and with one of the country’s three international airports located here, its strong transportation connections facilitate industrial development. “Algiers, the capital of Algeria is emerging as an appealing location for investors. A suburb of Algiers, in northern Algeria, Bab Ezzouar, is one of the fastest growing areas of the city. Home to the most prominent technological university in the country, the University of Sciences and Technology Houari Boumediene, the suburb has a vibrant, youthful community.”

FMBN promises to ease homeownership

anaging Director of Federal Mortgage Bank of Nigeria (FMBN), Mr. Gimba Ya’u Kumo, has assured Nigerians that the bank would work to continue to provide quality and affordable houses to Nigeria and strive to improve its balance sheet. He spoke in Abuja at the inauguration of a new board for the bank by Mrs. Akon Eyakenyi, Minister of Lands Housing and Urban Development. Ya’u Kumo, whose appointment was recently renewed, promised that the team would recapitalise the bank and improve the balance sheet structure to modify its standing as a financial institution. According to him: “Our strategy will involve developing pro-active and

effective strategies to attract offshore funding for affordable housing to Nigerians as well as improving service delivery to NHF contributors across the country. We also plan to look at improvement of members of staff welfare across board to ensure a well motivated workforce and profitable operations.” The FMBN boss said that the completion of ongoing housing estate projects under the Ministerial Pilot Housing Scheme nationwide and the completion of the Goodluck Jonathan Legacy Estate in Kaba District in the Federal Capital Territory, FCT, will be vigorously pursued. He assured the Federal Government and other stakeholders in the sector, of their determination to

sustain the cordial relationship they enjoyed in the previous years. “I use this opportunity to request that the same support and cooperation enjoyed by the previous executive management team be equally extended to the present team. As a returning member of the team, I have had the privilege of experiencing the various challenges facing the FMBN as well as the housing sector in general,” he said. Earlier, Eyakenyi had noted that the essence of reconstituting the team of FMBN was to reinvigorate the bank and effectively reposition it to meet the present and future challenges and gave a fresh mandate to the management to make house ownership easier for most Nigerians.

Vanguard, MONDAY, JANUARY 19, 2015 — 31

Interview

TECNO’s plant in Nigeria‘ll be ready this year —Okonkwo A

lthough many Original Equipment Manufacturers, (OEMs) in mobile phone segment and other devices operating in the Nigerian ecosystem have been struggling with infrastructural challenges, TECNO Mobile has summoned the courage to be the first to set up a manufacturing plant in the country. In this interview with Jonah Nwokpoku , the Deputy General Manager, TECNO Mobile, Nigeria, Mr. Chidi Okonkwo while highlighting what their growing consumers should expect in 2015 and beyond said that the first phase of the factory will be completed by the end of the year. Excerpt What should we expect from TECNO this year?

his year, we expect to improve on what we did last year. We want to see that we have more marketing activities this year. Of course we expect more competition and even new entrants into the Nigerian market and we will definitely provide more interesting and innovative products into the Nigerian market. Of course we have been taking all sorts of survey in the Nigerian market to see how we can bring products that will reflect the Nigerian lifestyle. We want to bring products that will contain what Nigerians need. So we will be launching a number of devices and there will be innovative marketing campaigns to back up these products that will be launched in the Nigerian market. We as a brand are also thinking seriously about Nigeria. This is because Nigeria is one of our biggest markets. And we have a huge investment plan in Nigeria. Right now we are setting up a manufacturing plant in the country and we hope that the first phase of that factory will be completed by the end

of the third or fourth quarter of this year. And when this is achieved, it is going to provide a lot more employment opportunities for Nigerians and we hope that this will be done this year. How much investment have you made in the manufacturing plant project? There is a budget which I may not be able to disclose in public at this moment but the final investment figure will still be known by the end of the day. This project is something that our management is very keen and they are pushing very hard to ensure that it is achieved. Doing business in Nigeria is very difficult given the infrastructure challenge, what are the challenges you expect and how you expect the authorities to come in? One of the biggest challenges we are facing in

has always been supportive to us. We hope that we will get more government support in the future since we are fully committed to Nigerian market. Is it a manufacturing or an assembling plant and

We have already secured the land and have started preparing the site at Epe in Lagos

Nigeria is fake or counterfeit TECNO products. We will appreciate if the authorities can continue to support us in fighting the influx of fake products into Nigerian market. What kind of support exactly do you expect from government? The Nigerian government

what is going to happen within the first phase of the project? We are building both manufacturing and assembling plant. By the time we complete the first phase we should be able to start manufacturing and assembling TECNO phones in Nigeria. Don’t forget that

we are still at the preinvestment stage right now and we are collating all sorts of information to help us accomplish this. We have been working on this since last year. We have already secured the land and have started preparing the site at Epe in Lagos here where it is located and we have to go through to get the necessary approvals. We are making sure that we get everything ready to make sure that this project comes to fruition. When exactly should Nigerians expect the first made in Nigeria TECNO phones? It is expected that once the first phase of the plant is completed in the third or fourth quarter, we will have the first batch of made in Nigeria TECNO phones. TECNO has been recording success in the Nigerian and other African markets where they operate, what can you say are those success factors? What has TECNO been doing differently? At TECNO we have been working very hard to make sure that we bring in products that are needed by Nigerians. We as a brand, having been focusing on the African markets and we also have been focusing a lot on

the Nigerian market. We have our research and development team always around taking feedback about from our users and we try to produce phones that are tailored towards what the Nigerian consumer needs. You will realise that our product is African/Nigeria centric, so that when you use our products, you will realise that they are truly made for the African market. Also things like our after sales support centres make it possible for our customers to get all the help they need since contact information are also loaded on our devices. We make products that are truly relevant and needed by the Nigerian consumers. Also we have tried to get close to the market and the consumers that we serve. We pay attention to what are needed in trying to ensure that these products are useful in the hands of the consumers. We have also built a very strong team in Nigeria that are supporting that are supporting our business all over the country. Again, don’t forget that our products, both our feature and smart phones come with whole lots of features that are comparable to our global competitors and yet people don’t have to rip their pockets to purchase these products. They are very affordable devices. This has made it possible for Nigerians to have access to products that are able to help them to do whatever they want to do on their mobile phones. These are the factors that have brought us to the level we are in today. Does the affordability of TECNO devices resonate with high quality? TECNO products are undoubtedly made with quality materials. And there is a proof of originality and authenticity of the products that you put out to sell and of course these products also undergo all sorts of approval processes through the regulatory bodies and government agencies in the country before they are sold in the Nigerian market. So before these phones are sold, we carry a lot of quality assurance tests on the products, to make sure that we are not bringing substandard products into the Nigerian market while keeping our products affordable. We want to see that more Nigerians use quality and affordable mobile devices to enhance their lifestyle wherever they are and in whatever they do.

32 — Vanguard, MONDAY, JANUARY 19, 2015

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Vanguard, MONDAY, JANUARY 19, 2015 — 33

34 —Vanguard, MONDAY, JANUARY 19, 2015

Insurance

Diamond Bank appoints Ogbechie Chairman as Igwe Achebe retires

iamond Bank Plc, last week announced the appointment of Dr. Chris Ogbechie as the new Chairman of the Board of Directors following the retirement of Igwe Ugochukwu Nnaemeka Achebe who has led the Board since January 1, 2007. The Bank in a notice dated January 13, 2015, to the Nigerian Stock Exchange (NSE), titled: Change in Directorate – Resignation and Appointment of Chairman, Board of Directors, signed by NkechiNwosu, the Company Secretary/Legal Adviser, disclosed that the Board of Directors of the Bank in a recent Board meeting, approved Igwe Achebe’s retirement and the appointment of Ogbechie as the new Chairman. “We wish to inform you that the Board of Directors of Diamond Bank Plc at its meeting held on November 29, 2014, approved the retirement of IgweUgochukwuNnaemeka Achebe, the Chairman of the Board of Directors of the Bank effective December 31, 2014. In his stead, the Board unanimously approved the appointment of Dr. Chris Ogbechie, a non-executive director, as the Chairman of the Board of Directors of Diamond Bank, with effect from January 1, 2015.” Igwe Achebe’s tenure as the Chairman of the Board was characterized with tremendous growth of the Bank in the quality of asset base and the entrenchment of the Bank as a leader in Retail Banking in Nigeria. He successfully saw Diamond Bank through the entry of Actis -an institutional investor -in 2007, the Global Depositary Receipts (GDR) listing on the London Stock Exchange in 2009, the 2008 Global Economic Meltdown, and more recently, the Bank’s Rights Issue of 2014.

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Disciplined underwriting key in overcapitalised global reinsurance sector - A.M. Best Stories by ROSEMARY ONUOHA

urrent conditions in the global reinsurance sector, which remains overcapitalised, demand that disciplined underwriting, be the focus of reinsurers, suggests a new report by A.M. Best. The report stated that despite the reinsurance market’s ability to prove resilient, “Most companies continue to indicate that intense competition is leading to lower underwriting margins for certain lines of business, the need for disciplined underwriting now more than ever should remain the focus.” The outlook for 2015 is clearly challenging, “With rates continuing to decline for some lines of business, terms and conditions becoming even broader, and ceding commissions increasing further,” the report stated. “The orderly approach to risk selection appears to be working for global companies, and most are expected to remain cautious on the business they write as capacity remains high and the market becomes increasingly competitive “Companies that write predominantly reinsurance and focus on underwriting are in danger of reducing their books of businesses to levels that may render them less relevant in the market, which could lead to more merger and acquisition activity,” A.M. Best cautions. Citing a number of acquisitions over the past year – including the January 2015 announcement that XL has entered a definite merger agreement to acquire Catlin – these are all examples “of the need for greater global scale and diversified product lines and distribution, replacing the days of specialty-focused reinsurance companies. Companies with welldiversified businesses and a global reach likely will only get larger as smaller players put themselves up for sale or seek strategic partnerships to survive,” the report continues. With regard to pricing, there was double-digit declines in certain lines of business in 2014. “Reinsurance pricing overall is expected to remain under pressure in 2015, given the lack of any price-changing event over the past few years.” The report notes that January renewal pricing for property

AWARD - The Austin Epadi-Igbuku Lights on Foundation held its annual awards ceremony recently to promote academic excellence among secondary schools in Isoko, Delta state. Here is Mrs. Erezi Igbuku presenting award trophy to Miss Edhere Priscilla Oromena, for overall best student contracts was once again down 10 percent to 15 percent for both United States and European risk. Other findings in the report include: with new capital and reduced reinsurance purchasing by some large cedents, market conditions are expected to remain challenging for the reinsurance business in 2015 and lead to further pressure on pricing,

The need for disciplined underwriting now more than ever should remain the focus

particularly in property and cat lines; favourable reserve releases and the lack of any major Cats over the past few years continue to aid combined ratios for the entire industry; given the strong capital positions of many companies, share buybacks are expected to remain a strategy for companies looking to improve returns for shareholders, and that will slightly offset some of the challenges companies face on the income side.

Lagos State partners UK Cambridge Hitachi to promote virtual learning

s part of efforts to host the United Kingdom Cambridge-Hitachi, (C/H), centre in the state, the Lagos State Government has partnered C/H to sign the Memorandum of Understanding for the commencement of the Centre. The state, through its team of three high level delegates, will meet with the Cambridge-Hitachi team at the University of Cambridge in UK in due course to sign the Memorandum of Understanding for the commencement of the Centre. This was according to the Director, Local Organising Committee, Cambridge-Hitachi Virtual Teaching / Learning, Princess Adebukola Abike Oluderu. Oluderu said that Lagos State Governor, Mr. Babatunde Raji Fasola, has taken the bold step to acquire 2, 000 multimedia interactive solution for the

tertiary and the secondary schools in the State. Held last year in Lagos, the CambridgeHitachi round table meeting on education in Africa had yielded result with the Lagos State Government taking the lead as the first Cambridge-Hitachi virtual Teaching/ Learning Centre in Africa with Nigeria taking the lead. Lagos State, through the Commissioner for Education, Mrs. Olayinka Oladunjoye reaffirmed the Lagos State Government’s readiness to host the centre. In the previous correspondences and the bid forwarded by the State, a special centre is approved for Lagos State based on her outstanding performances and availability of infrastructure already put in place for improving the educational sector. Furthermore, Lagos State has given assurance to exceed the provision of interactive multimedia solution from the target of 1,500 to 2,000 classrooms.

Vanguard, MONDAY, JANUARY 19, 2015 — 35

Micro-Finance

Commmodity Index Jan 09 - Jan 15, 2015

AMfB disbursed N10bn loan in 2014 Stories by PROVIDENCE OBUH

c c i o n

Microfinance Bank (MfB) disbursed about N10 billion as loan in 2014 even as it celebrates loyal customers. The loans were disbursed to 49,443 clients bringing the total loan disbursement from inception to date to N32.8 billion and the number of customers that joined the bank in 2014 from 64,845 to 86,665. Speaking at the occasion of the bank’s Annual Customers’ Forum in Lagos, Managing Director/ CEO AMfB, Ms. Bunmi Lawson, revealed the figure, saying that Inspite of the challenging Nigerian economic environment in 2014, the bank has continued to do well, growing from strength to strength in the industry. Some of the products lined up for customers in 2015 include: repackaging of the Group Loan product to address concerns; deploying more ATM machines for easy access to funds; spreading to other states. Other products to help in addressing customers need include: SME, Agric, Education, PayGo, Housing, product for people with

disability and an additional insurance products and benefits in cases of flood, fire, burglary, permanent disability, death/burial, special product for the

The number of customers that joined the bank in 2014 increased from 64,845 in 2013 to 86,665

African MIV portfolio grew at 36% in 7yrs tool for economies with BY PROVIDENCE OBUH with agency report

eport has shown that the African M i c r o f i n a n c e Investment Vehicle (MIV) portfolio grew at 36 per cent between 2006 and 2013. Meanwhile, from the year 2000 to 2014, the gross loan portfolio of African Micro Finance Institutions (MFIs) expanded over tenfold to $6 billion, between 2003 and 2009, the number of borrowers served by MFIs in the continent also increased from 1.6 million to 8.5 million. These numbers represent the development of an economic development

ARSO seeks to revolutionize Africa’s agro sector

he African Organisation for Standardization (ARSO) has reiterated its commitment to revolutionizing Africa’s agricultural sector, saying that all hands must be on deck to adopt new technologies to help the continent move from reliance on food imports and secure food supplies through rapid sustainable increase in food production. In a statement, ARSO explained that under ARSO THC 02, Agriculture and Food Products, chaired by Tanzania with membership and experts from across the continent, it will help African countries revolutionise agriculture by addressing issues of handling, packaging, labelling, storage, processing and fulfill many of the broader requirements for producers to participate in global supply chains. In the statement, DG, SON, Dr Joseph Odumodu, said that programmes are under way to help Africa produce high-value products; codify sustainable agricultural practices in order to address sustainability issues required to tackle environmental degradation, soil infertility, soil erosion, declining yields, increased pests and C M Y K

women folk, among others. Accordingly, she said, “We will also continue to deliver and provide efficient, quality and seamless services through our numerous delivery channels and products. Access to loans, savings, collections and other services will be made simpler in the New Year. Our staff will from this year capture data in the field, POS for collection will continue. We are also repackaging the Referral programme. Lawson said that the

very small financial sectors and it is impressive progress for an undeveloped industry beset by sparse human capital, difficult governance and minimal external commercial interest. According the report, “The African MIV portfolio grew at an average annual rate of 36 percent between 2006 and 2013. This compares with an average growth of 38 percent for investments in the Latin America and Caribbean region since 2006, and eight percent in both the Middle East and North Africa and South East Asia regions. “African MFIs are attracting palpable interest from investors with a double bottom line. At the most recent meeting of the Financial Inclusion Equity Council (FIEC) in Zurich, social equity financiers, many of whom represent the expanded cohort of Africa investors, noted that there is strong interest to invest in Africa, which is seen as ripe for social impact investment, with potentially “eye watering” multiples. AfriCap, which was the first private equity fund to invest exclusively in African microfinance institutions, and other m i c r o f i n a n c e investment vehicles (MIVs) funded by social investors have been a key growth factor through capitalizing MFIs and offering technical assistance and training.” C M Y

36 — Vanguard, MONDAY, JANUARY 19, 2015

Aviation

Discovery Air suspension: Passengers to get 25% rebate By LAWANI MIKAIRU

iscoveryAir Airline has said that the affected passengers on cancelled December 24th and 25th flights will be given a refund and 25 percent rebate on subsequent trips with the airline. This is coming as the management of the airline also said their suspension

from flight operations by Nigerian Civil Aviation Authority, NCAA, is not due to any technical problems in the operation of the airline, but due to flight delays and cancellation during last Christmas festive period. This position was made known by Mr Babatunde Babalola, Chairman of Discovery Airline, while

addressing aviation reporters in Lagos. According to him, “ the airline’s Air Operators Certificate, AOC, was suspended due to flight delays and cancellations it experienced during last festive period.” It will be recalled that Discovery Airways was last Tuesday suspended from operating any flight as its Air

Operator’s Certificate, AOC, was suspended by the Nigerian Civil Aviation Authority, NCAA. This suspension would be in force pending the outcome of a comprehensive review of the Airlines operations to be carried out by NCAA. According to Babalola “We are addressing issues raised by NCAA. We have got in touch with the passengers based on what the regulation says. Principally, we have to

deal with the customers who were not satisfied with our operations during the Christmas period. “There are some passengers that complained to NCAA directly; some complained to us while some complained to their lawyers. We have engaged the ones who complained to us directly and gave them form to fill and put their account details; and we are going to refund their money and pay them 25 per cent rebate for subsequent trip as stipulated by the regulation” He added that passengers would still patronize the airline when it re-commences operations. “For those passengers that recognize our brand, they know the brand they fly. I can tell you some people have been loyal to us and they still want to patronize us. I don’t see any reason people will not fly Discovery Air again. They know what we are made of. They know who we are. Discovery Air is a growing airline and we will get to where we want,” he said. Mr Sam Adurogboye ,

Arik Air resumes flights to Cotonou, Doula

rik Air, will resume flight services to Cotonou, Benin Republic and Douala, Cameroon from today. Flight services between Lagos, Nigeria and Cotonou/Douala were suspended last year in the wake of the outbreak of Ebola Virus Disease in some parts of West Africa. According to Arik Air’s Managing Director, Mr Chris Ndulue , “We are pleased to return to Cotonou and Douala after the brief period of suspension of flights. We thank our guests for their loyalty and promise that we shall not renege on our pledge to provide world-class experiences and services which are safe, reliable and continually contribute towards the quality of life in the region.” Arik Air will be operating four weekly flights from Lagos to Cotonou and Douala on Mondays, Tuesdays, Thursdays and Saturdays.

Vanguard, MONDAY, JANUARY 19, 2015 — 37

Tax Matters

he operation of the a x law is universally administered. Every person (corporate or individual) is a taxable entity no matter how, when and what method is used to conduct the business. The Federal Inland Revenue Service (FIRS) has adequate mechanisms to assess and bring all taxable entities into the tax net. Among these methods is cordial dialogues with stakeholders during enlightenment drives to achieve mutual understanding and promote voluntary compliance. Registration by Taxable Persons Section 8(q) of the Federal Inland Revenue Service Establishment Act, 2007, directs the Service to issue a taxpayer identification number to every taxable person in Nigeria in collaboration with State Boards of Internal Revenue and the Local Government Revenue Boards. Section 8(1) of the Value Added Tax Act (VATA) Cap V1 LFN, 2004 as amended in 2007 also requires taxpayers (individuals, enterprises or corporates) to register for VAT. However, when the tax identification number (TIN) is generated, it suffices and covers all the tax types as no other registration number for any tax type will be required. Reference to Section 8(1) of the VATA as amended, it is specifically stated that “A taxable person shall, within six months of the commencement of the Act or within six months of the commencement of business, whichever is earlier, register with the Board for the purpose of the tax (VAT).” The phrase whichever is earlier, that specifies the time for registration, has caused a lot of pain for taxpayers in VAT administration. It is not practical to expect that a business just recently incorporated (say in 2011) to have registered in 1994 for the purpose of the tax. Hence, a business incorporated after 1994 is expected to register within six months of the commencement of business. Therefore, penalties (and other sanctions) for late registration for VAT would start counting immediately after the six months of commencement of business if the taxpayer fails to register for VAT and not six months from the commencement of the VAT Act when the business was probably not in existence. Historical Antecedents of VAT *VAT was first introduced t

Enhancing VAT voluntary compliance

as consumption tax in 1919 in Germany, France (1954), UK 1973 etc. *Introduction was occasioned by the impacts of 1st and 2nd World Wars. *The adverse effects of direct taxation on the economy, individuals and businesses. *The introduction of consumption tax was later modernized into VAT. *The high point of VAT is that it has no noticeable impact on the taxpayer because of its indirect nature. VATable Income In arriving at what constitutes a VATable income, all income from sales, rentals, charges and fees relating to activities enjoyed by customers are VATable and should be charged with VAT. The law did not make provision for any activities or services that is non-VATable in the industry. First Schedule of the Act stated Goods and Services Exempt from VAT in Nigeria. The implication of the schedule is that any other business activity in the form of buying and selling or rendering of services or enjoying any rights which are not stated in the schedule are liable to VAT. Duration of Remittance All VAT charges should be remitted to an FIRS office within 21 days in arrears on a prescribed form 002. This is supported by Section 15 of the Act. Meanwhile, a taxable person who does not remit the tax within the time specified above, will be liable to 5% penalty and interest at commercial rate, added to the tax and the provision relating to collection and recovery of the unremitted tax, penalty and interest shall be

FIRS encourages voluntary compliance instead of the use of coercion

employed. Similarly, a taxable person who fails to collect tax is to pay 150% of the amount not collected plus 5% interest above the Central Bank of Nigeria rediscount rate. Concept of Voluntary Compliance FIRS encourages voluntary compliance instead of the use of coercion. Tax compliance relates to the degree to which a taxpayer complies (or fails to comply) with the tax rules of a country, for instance, by declaring income, filing returns and paying the tax due on or before the due date. Voluntary tax compliance is a situation where a taxable person or entity files returns without the tax authority resorting to using the instruments of the law and force to ensure compliance. It is voluntary when a taxable person discharges the statutory obligation of tax payment on self-conviction and as a call to duty without notice or reminder within

the time line allowed by law. FIRS’ Means of Enhancing Voluntary Compliance *Through education and sensitization of operators. *Business owners should have open an mind and seek clearance from FIRS when in doubt and seek further legal advice when not satisfied. *Regular monitoring/audit visitations to check compliance and enlighten taxable entities on their roles and responsibilities. *FIRS ensures that the principle of know your tax payer (KYTP) is adhered to, so that it would be easy for taxpayers to reach schedule officers for information and guidance/assistance. *Regular provision of VAT forms 002 for monthly rendition of returns. *Encourage voluntary compliance to avoid infraction of the law. *Consistency and civil enforcement of the provisions of the tax law *Imposition of interest and penalties and enforce compliance where default occurs. *Improvement in the work process of the tax office to make compliance easier. *Compliance with the Taxpayer Identification Number requirements by business owners. *Monthly rendition of returns and payments on or st before 21 of each month in arrears, to the nearest FIRS office. *Proper documentation and record keeping of VAT charges taken at source, returns and payments vi-a-vis correct profiling of income sources. *Businesses should note that they are not the party suffering the VAT, but a mere

agent of collection and remittance. *It is better to charge wrongly and remit to FIRS, than not to charge at all, because when the actual liability is established, it is owner of the business that would bear the entire burden. Consequences of NonCompliance *Out of the entire VAT Act, of 47 sections, about one third of the provisions are on offences and penalties. *Statute based consequences are highlighted from section 25 to 37 of VAT Act Cap VI, 2004 as amended in 2007. Some examples of offences and penalties are: failure to submit returns attract a fine of N5,000 for each month the failure continues. *Failure to collect tax attracts penalties of 150% of the amount not collected plus 5% interest above CBN rate. *VAT evasion attracts N30,000 or twice the amount of tax evaded whichever is greater or imprisonment for a term not exceeding 3 years. *Failure to keep proper records of accounts would attract N2,000 fine for every month the failure continues. *Failure to issue tax invoice attracts fine of 50% of the cost of goods and services for which an invoice was not issued. *Offences by body corporate: Every officer, manager, secretary and other similar officer including partner in partnership shall be severely guilty of an offence under the act, etc. Reputational Implication *Second categories of consequences of noncompliance are reputational and reporting risks. Apart from reputational damage arising from actions by FIRS to enforce compliance via distrain, search and seizure, and litigation, amongst others. *Reporting risk involves the imposition of interest and penalties. *All the interest and penalties imposed on any of the aforementioned offences would be enforced. FIRS tries to avoid enforcing compliance because of the Service’s slogan, “Taxpayers are King” except on recalcitrant taxpayers. It is necessary to once again emphasize that nightclub and event center activities are not exempted from VAT. Consequently, taxpayers are encouraged to embrace voluntary compliance since the consequences of noncompliance are enormous; ranging from statute based sanctions to reputational damage/reporting risk.

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38 — Vanguard, MONDAY, JANUARY 19, 2015

“History does not repeat itself; man does”. Barbara Tuchmann.

igerian leaders in government, military or civilian, simply never seem to learn some lessons permanently. They make the same mistakes over and over again – leaving observers wondering if there is not some truth to the assertion that black people are mentally inferior. After all, some of those we elected, or were imposed, as governors are among the “brightest and best” we have ever produced. Yet, each change of baton from one Head of State, or one governor to another inevitably results in several abandoned projects. By definition, these are projects started by a previous administration, which was unable to complete it before departing, and which its successors then leave unfinished. For frequent travelers through Okene from Lagos, Oyo and Ondo states, the classic example of an abandoned project stares them in the face as they turn from the road leading from Ibilo to enter Okene. There stands a project which was started during the Second Republic, 1979-1983, by the NPN Governor of then Kwara State (Kogi did not exist at the time). Whatever purpose it was supposed to serve is now shrouded in mystery. The former governor served only one term and was replaced by a UPN Governor in 1983 – whose tenure lasted only three months. That change of governors brought to an end

Return of abandoned projects a project on which mobilization fees had been paid and on which close to 70% of the contract sum had been collected. It remains today a monument to our collective irresponsibility. Oyo State provides another example. Governor Alao Akala started a dualised road which would link the end of the Lagos-Ibadan Express Road with the Ibadan-Abeokuta Road at Apata and reduce the hold-

The alarm about abandoned projects is timely because apart from the change of governments nationwide, the revenue base is certain to shrink

up around Challenge. It was uncompleted when it was hastily commissioned by President Jonathan; and remains uncompleted till today. It may never be completed. The really inexplicable and potentially abandoned project is situated in Akwa Ibom State – right in Uyo; that is the state capital. It is remarkable that all those not too familiar with developments in the state and who only visited AKS once or twice have failed to notice the imposing structure along Ikot Ekpene Road. It is supposed to be world class Specialist Hospital. Unless rescued by Governor Akpabio’s successor, it might turn out to be a world class abandoned project. Started very early in 2007, the people were promised it would be completed before the end of the governor ’s first term. That first tern ended almost four years ago. Meanwhile, several white elephant projects – Ibom Cinema, Stadium, Banquet Hall – had been completed and they now stand empty. There are several reasons why the Specialist Hospital might go the way of the Okene and Ibadan structures. First, successors don’t want to pay for a contract when the benefits have long been collected by someone else. Second, they instinctively

know that the contracts have most probably been inflated and they don’t want to pay the balance of the contract out of the funds entrusted to them. More to the point, what makes the failure to complete the Uyo Specialist Hospital, in eight years, is the fact that Akwa Ibom State government became the first state to collect over N1 trillion from the Federation Account in four years in the history of Nigeria and it is on course to repeat the same feat from 2011 to 2015. So, why has a very critical service to the people of the state been neglected while billions were thrown into a cesspool called Tropicana Hotel? Lack of funds can certainly not be the excuse. Meanwhile, the Federal government of Nigeria seems poised to add its own to the list of thousands of abandoned projects. The Lagos-Ibadan Express Road, which was belatedly started two years ago, might again be abandoned by contractors – if the Federal government fails to pay any time soon. The road had suffered many reversals in the past and the problems might not be over yet. The alarm about abandoned projects is timely because apart from the change of governments, which will soon occur nationwide, the revenue base is certain to shrink with the price of crude

oil going down every day and an economic recession looming. Most out-going governors, if not all, will leave unfinished projects all over their states. Even if the party in power, at the moment retains the seat, it is not certain that the successors will continue with the projects inherited. If a new political party takes over, it is certain that the projects will be abandoned. Contractors owed by state governments and who have not been paid by May 2015, will find it almost impossible to collect their debts. That was the experience in 1983, when the military replaced civilians; it was again the experience in 1994 when Abacha sacked the governors after the annulment of the June 12, 1993 elections. History is about to repeat itself because Nigerians never learn from the lessons of history. The problem with an abandoned project is easily explained by referring to building half a bridge. It is not good for crossing and it ties down capital. Yet, this is what our leaders do all the time. For someone who has been an observer of the national economy since Gowon’s Udoji awards in the 1970s, the frustrating thing is that the same things are done by us, over and over, with terrible predictability and consequences. Invariably, “For every folly of their [leaders] the [Nigerian people] feel the lash”, Horace, 65-8BC, slightly amended.

E-commerce E-commerce: Nigerians decry dearth of legislations Continued from page 29 resulted to unpleasant experiences like identify theft and privacy invasion for consumers thereby throwing up bitter litigations for businesses and its resultant loss of income. These and other concerns have formed the basis for which most of these countries enacted laws to guard against unforeseen circumstances from ecommerce related activities. E-commerce related privacy laws Such laws include The Data Protection Directive, a European Union directive which regulates the processing of personal information within the European Union and the

personal Data Privacy and Security Act US (2005 updated 2009) which provides criminal penalties for identity theft involving electronic personal data by: increasing penalties for computer fraud when such fraud involves personal data. No e-commerce legislation in Nigeria However, despite the growing trend of electronic commerce in Nigeria, investigation has revealed that at the moment, there is no legislation targeted at e-commerce both for consumer rights protection, personal data protection and privacy invasion resulting from unauthorised use of personal information. Over the past four years, attempts at introducing such laws have

yielded little results. For instance in 2011, the electronic commerce bill was introduced at the National Assembly to cater to the exigencies of electronic transactions. Although the bill was intended to be modelled after the United Nations model law on ecommerce, the proposed legislation had limited scope and made no specific provisions for privacy and security concerns.

Investigation has revealed that at the moment, there is no legislation targeted at ecommerce

Instead, it made to clear the intricacies surrounding electronic contracts and signatures. The cybercrime bill Other legislation included the Cybercrime bill which up until 2013 was still being considered at the National Assembly. The bill sought among other things to provide an effective and unified legal, regulatory and institutional framework for the prohibition, prevention, detection, prosecution and punishment of cybercrimes in Nigeria; ensure the protection of critical national information infrastructure; and promote cyber security and the protection of computer systems and networks, electronic communications; data and computer programs, intellectual property and

privacy rights. Although it made provisions along these lines, experts say, it still leaves certain loopholes that did not make for effective data protection and privacy guarantees. For instance, they argue that the bill contained no definition of what constitutes personal data, no identification of the right to privacy, no definition of what constitutes data subjects rights, and no identification of the fact that organisations can also breach data protection rules. Others include that there was no provision for circumstances where the personal data needs to be utilised without the consent of the data subject, and no definition, or mandatory requirement of technical measures to mitigate data protection breaches.

Vanguard, MONDAY, JANUARY 19, 2015 — 39

Business & Economy

Minimum capital: Fresh dialogue underway over implementation By P eter Egwuatu Peter Nkiruka Nnorom

here are indications that the Securities and E x c h a n g e Commission, SEC may softpedal on the implementation of new minimum capital base for capital market operators following the change of leadership in the commission. Also, the Nigerian Stock Exchange, NSE, has said that implementation of minimum operating standard for stock broking firms operating in the Nigerian capital market will commence by the December 31, 2015. It will be recalled that the commission had extended the deadline for the recapitalisation of capital market operators from December 30. 2014 to September 30, 2015 under the leadership of the immediate past Director General, Ms. Arunma Oteh. Vanguard gathered that some major capital market operators have concluded arrangement to meet with the new leadership of the commission led by Mr. Mounir Gwarzo and other government functionaries to discuss on the capitalisation issue as well as other incentives needed to attract investors and boost market activities. It was gathered that some of the market operators will dialogue with key officials in government agencies to ensure proper alignment of the capital market to Nigeria Fiscal and Monetary policy implementation. A source said “ It is not unlikely that the issue of recapilisation would be discussed again with the new leadership of SEC to see how the implementation can be soft-pedal or even the entire recapilisation requirement be restructured in a way that all operators would meet the minimum level without stress. You know that the Acting Director General of SEC , Mr. Gwarzo has been an operator and a regulator , so he knows where the shoe pinches and would likely consider the views of operators when confronted.” Speaking further, the source said “ Though, I believe that over 50 per cent of the operators have met the new capitalisation requirement, but we still believe that capitalisation should not be a major issue in the market

•Oscar Onyema especially for stock broking firms. We don’t need much of that capital to carry out our business. This is because we buy and sell based on clients’ order. This is part of the things that will be tailoured to the new leadership of SEC.” It will be noted that the apex capital market regulator increased minimum capital base for broker/dealer by 329 per cent from the existing N70 million to N300 million. A Broking firm, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer was increased by 233 per cent from N30 million to N100 million. Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million, as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. A Registrar will now have a minimum capital base of N150 million, as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent, from N500,000 to N2 million. Meanwhile, on the issue of minimum operating standard by the NSE, the Chief Executive Officer of the exchange, Mr. Oscar Onyema said that only

•Albert Okumagba, CIS president

We still believe that capitalisation should not be a major issue in the market especially for stock broking firms

stockbroking firms that meet the minimum operating standard would be allowed to continue operating in the market at the expiration of the deadline. The guidelines on the Minimum Standard requirements for Operations of Broker Dealers address the following five broad areas and provide the minimum standards expected in the operations of all Broker Dealers in the Nigerian capital market: manpower and equipment; organizational structure and governance; effective processes; global competitiveness; and technology. According to the guideline obtained by Vangaurd, a broker/dealer firm is expected to have efficient human resource to see to the daily

operations of the firm in order to ensure effective service delivery and risk control, adding that it is essential that it employs high quality staff that should be adequately supervised where required. This, according to the Exchange, will prevent exposure of the business to avoidable actions and unscrupulous practices which in turn threaten the integrity of the market. Furthermore, it stated that building capacity also requires continuous training of staff, while stipulating the standard academic qualification to be attained by different officers in a stockbroking firm. On the minimum equipment required a dealing member firm, the NSE stated that sufficient office space and other materials regularly used in offices by businesses and other organizations for smooth operations should be in place. Such include small, expendable items in daily use to furniture, machines and other higher-cost equipment. The following minimum equipment items are recommended: an accessible office with decent ambience, space and meeting rooms; photocopying machine/ scanner, adequate power supply with adequate backup; decent ambience, including table and chairs for staff and clients; fire proof cabinets and safe; desk telephone and/ or dedicated GSM line, help desk and operational vehicle. The operational structure, the NSE stated in the guideline, should determine how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management. The organizational structure is influenced by the objectives and strategies of the firm and is manifested in the operations and performance of the firm, among other stipulated guidelines. The interpretation guidelines released by the NSE prior to this time explained that broker dealers are high risk operators by the nature of their business. The guideline has it that although market activity has risen significantly for a number of dealing member firms, their operating standards have remained the same. The NSE said in the guidelines, “Many have not established structures commensurate with the growth of their businesses, the capital market’s challenges and the associated risks.

BP oil spill smaller than feared

P faces a fine of up to $13.7 billion after a US judge ruled that the 2010 Gulf of Mexico oil spill was smaller than initially feared. His ruling put the spill at 3.2 million barrels - the US government had estimated it at 4.09 million barrels. It shields the oil giant from what could have been a $17.6 billion fine. A final figure is expected later this month. The case relating to the aftermath of the Deepwater Horizon drilling rig explosion was heard in New Orleans. In his ruling the judge said BP’s response to the disaster had not been grossly negligent. However, he stuck to his earlier decision that it had been grossly negligent leading up to the explosion, in which 11 men aboard the drilling rig were killed. BP is appealing against that decision. These latest penalties under the US Clean Water Act would be in addition to more than $42 billion BP has set aside or spent already on clean-up, compensation and fines. The company has sold at least $39bn in assets since the spill.

US consumer prices post biggest drop in 6 years

.S. consumer prices recorded their biggest decline in six years in December and a gauge of underlying inflation failed to rise, which could make the Federal Reserve more cautious about raising interest rates. Other data on Friday, however, suggested the economy was still poised for solid growth despite the soft inflation readings, with factory output rising last month and consumer sentiment hitting its highest level in 11 years in January. The Labor Department said on Friday its Consumer Price Index fell 0.4 percent last month, the largest drop since December 2008, after sliding 0.3 percent in November. In the 12 months through December, CPI increased just 0.8 percent, the weakest reading since October 2009, and a sharp deceleration from November’s 1.3 percent rise. C M Y K

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Advertising

Telecom glitches: Consumers lose heavily despite tariff crash Stories By PRINCEWILL EKWUJURU

elecommunications consumers in the last few months to the end of 2014 experienced deluge of poor service which trickled down to the early part of 2015. For example, many subscribers in the last quarter of 2014 had complained of increased re-vibrated calls, call clashes, SMS charges without delivery, failed data charges, calls from encoder without the decoder hearing from the encoder which has been the stock in trade of service providers overtime. These situation was attributed to the recent promotion embarked upon by the providers. The Airtel red hot promo, MTN’s cash quest and Glo overload and Glo Allawee, which gives subscribers N18,000 free airtime was said to have compounded glitches in networks, which has led to many subscribers dropping recharges for a while, particularly for a network that has major glitch at the recharging time. Recently, a mild drama occurred in a family in Lagos where a family was thrown into confusion , when a husband could not be reached owing to network challenges, the husband’s phone had replied the wife that it was switched off, which the wife misinterpreted. Another was a situation the wife’s phone was believed to be busy when actually her phone was on, while the husband misconstrued it to mean she was not sincere with their relationship. In 2003, it was reported that the attack on communications facilities by the Boko Haram sect in Borno state was responsible for the lull in network performance, today the situation is different, which has kept subscribers wondering what the challenges are, but that providers are not sincere with their social contract with subscribers. A glimpse into the telecommunications market show that service providers are not making efforts to right their wrong even in the face of serious network challenges which has also led to abortion of some contractual agreements. Meanwhile, it appears that the ban laced by the Nigeria C o m m u n i c a t i o n s Commission, NCC when

On the part of Glo consumers it was no different story from what other subscribers have complained about same problem persisted as a result of barrage of promotions by the providers some years back, may have to be revisited by the commission. These challenges moved Vanguard to town to test the pulse of consumers. In the 125, 000 subscribers spoken to

across the networks, they said despite the crashed tariff, poor services still persist. A subscriber, Martin Orhii, an Airtel subscriber attributed the congestion to the promotions embarked upon by the service providers, where customers want to participate at the same time, which invariably has led to the challenges on the networks. Andrew Owei is of the same view with the above subscriber who called for withdrawal of the promotions to enable consumers enjoy services paid for. Of the 125,000 respondents interviewed across Nigeria, Lagos, Ogun, Osun, Imo, Enugu, Rivers states, during September to December 2014 and part of January 2015

revealed that 55 respondents who are Airtel subscribers were bitter with the network’s service of which they say the network customer service is wonderful at relating with what they call premium subscribers whom they monitor to find out how the network is performing, neglecting other of their subscribers to wallow in congestion occasioned by poor service. The other 45 respondents said MTN has the same problem associated with other service providers, during the period under review of which they complained of the voice call service, re-vibrated calls and data services. On the part of Glo consumers it was no different story from what other subscribers have complained about, 35 of the respondents said Glo data services needs improvement, of which eight of the respondents said they had to opt out of their service to switch to another provider where they got a little respite which was also short lived. Some dealers in major network cards, noted that patronage to telecommunication services in Lagos dropped by over 30 percent particularly at Christmas period when business was expected to flourish. The distributors blamed the slow nature of business on

How par tnership, ef fective communication drive brand loyalty T he success of many global brands that are household names today is possible because they mastered the art of creating highly attractive partner and customer value propositions. Brands, through effective communication have endeared themselves to consumers and increased their market share. The publicity and goodwill generated around the recent partnership between Chivita 100% and Manchester United football club is a testament to how effective communication strategies have not only endeared consumers to the fruit juice, but also helped increase sales. The partnership has created massive exposure and visibility for the Chivita 100% brand through an effective online, television, print and

outdoor campaign in recent times. From positive reviews of the partnership in major television sports programmes, newspapers and digital platforms to visible outdoor presence on prominent billboards and Rapid transport buses, the publicity strategy has been effective in creating affinity and sustaining loyalty for the brand. Already, publicity around the partnership is generating tangible results through increased traffic to the very popular Chivita 100% Page on Facebook. Communication of the partnership has ensured that the number of likes on the page crossed the 200, 000 threshold and is currently approaching 250,000.

According to Chi Limited’s Head of Marketing, Probal Bhattacharya, the company developed a communication strategy for publicizing the partnership which has been effective. “For us at Chi Limited, our style of placing premium on our consumers cannot be compromised and it drives the way we engage with them through advertising strategies that are informative, exciting and rewarding.” “We embarked on the journey to adopt a 360 degree marketing philosophy and engagement platforms that are veritable and accessible to our consumers. We are happy that through the communication mix deployed for the campaign, the consumer response has been very encouraging.”

Airtel TV show, ‘Touching Lives’ premieres

he newly launched Airtel Reality TV show; “Touching Lives” has premiered on Africa Magic Channel 154. The show according to report does much more in putting a human face to the struggles and challenges of everyday Nigerian. The reality of our lives is that it is always hard to judge the actual depth of the daily lives of others who are not within our range, so Touching Lives has, by just one episode, magnified this without coming across as being cliché or judgmental. There is a lot to like and learn from Touching Lives, particularly the ambitious scope of the project that its creator Airtel Nigeria and the show host Wana Udobang have mapped out. The opening montage music, which is absolutely essential to the series and might have been its makeor-break element, is expertly overseen by Olawale Olapetan, who acts as both musical director and songwriter.

Cussons Baby Competition: Search for winner begins

ollowing the submission of entries for the Cussons Baby Moments Competition 2, which commenced a few months ago, the search has begun for the baby who will emerge the winner. This edition saw a total of 298 entries as opposed to the maiden edition of 202. According to the Brand Manager, Miss Oluwaseun Ayeni, the selection criteria for Season 2 will be in 4 stages comprising a combination of public votes and selection by an independent panel of judges. st She said “the 1 stage was the determination of the top 50 with the highest number of likes on Facebook while the 2nd stage will see the judges prune down the top 50 to the best 20 based on the personalities, appeal and fit to brand essence. Stage 3 is expected to take the shortlisted top 20 back to Facebook where the public will have the opportunity to decide who the best 10 will be. Stage 4 is the grand finale where the eventual winner will be decided by the judges”. C M Y K

44— Vanguard, MONDAY, JANUARY 19, 2015 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

“In the medium to longterm, addressing truly economic transformation becomes imperative. Alignment between annual budget, medium –term framework and long-term national plan needs to be put in place; there should be a legal provision to issue dollar coupons to state governments as often advocated by economist Henry Boyo, to reduce or eliminate liquidity problems and bank’s dubious profits,” Sherriffdeen A. Tella. The above is an excerpt from the concluding part of a recently published article titled “Addressing Nigeria’s Bleak Economic Outlook in 2015"; the author Sherifdeen Tella, is a Professor of Economics at the Olabisi Onabanjo University. Tella’s endorsement of our advocacy for a reformed payments system provides a refreshing reassurance that the totality of our minds has not become ensnared in a lethargic spell that restrains us from rational judgement, even when it pertains to the choices of the critical processes that determine the success of our economy and our chances of halting deepening poverty nationwide. Sadly, the proposal for the adoption of dollar warrants coupons for the allocation of dollar derived revenue has been in the public domain since 2002. Indeed in August of that year, my colleague, Adiagofua Ojomaikre and I made a formal presentation on the beneficent economic multiplier impact of abolishing the “traditional” process in which the CBN unilaterally fixes a Naira exchange rate, before creating fresh Naira values as allocations in replacement of distributable dollars. In our presentation to the National Economic Intelligence Committee (NEIC), we explained how

possibly over 50 million unemployed citizens, with youths constituting a high proportion of the jobless, but regrettably, the EMT appears unwilling to stand on the side of the people by also affirming that the adoption of dollar warrants will rapidly realign the forces for inclusive economic growth in our favour. Although both Prof. Tella and NISER raised an issue on the legality of the use of dollar certificates, I do not however see that such a payment process contradicts the provision in section 162 of the 1999 Constitution (amended). That section reads as follows: “The Federation shall maintain a special account to be called “THE FEDERATION ACCOUNT” into which shall be paid ALL REVENUES COLLECTED BY THE GOVERNMENT OF THE FEDERATION, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.” It is clear from the foregoing that CBN is vested with the responsibility for paying allocations according to ratios which are constitutionally enshrined but the Constitution certainly does not preclude States and other government agencies from operating a domiciliary bank account for the custody of their forex earnings. Indeed, if the laws currently permit every Nigerian citizen to operate a domiciliary account, it would be unconscionable for Sates and other agencies of government to be excluded from such liberty or privilege.

ECONOMY: LET’S DO IT RIGHT this unfortunate payments strategy poisons the system and makes inclusive economic growth unattainable. Not surprisingly, NEIC Council members to whom we made the presentation did not fault our observations and conclusions on the distortional impact of the surplus cash syndrome instigated by CBN’s monthly injections of hundreds of billions of additional Naira values into the money market. They recognised such a payments process ‘inadvertently’ also engenders a systemic Naira surfeit which instigates disturbingly high rates of inflation as well as oppressive interest rates to the real sector, particularly the Small and Medium Enterprises which are the critical drivers of job creation and increasing productivity. Over six months after the presentation, however, NEIC’s answer to our request, , for a feedback on the proposed further consultation with President Obasanjo and critical members of the Economic Management Team, was promptly given the following bewildering response in the their letter of 25th March, 2003, which read as follows: “The National Economic Intelligence Committee acknowledges receipt of your letter dated 8th March, 2003, on the above subject matter. Also the two attached papers: Economists as Soothsayers and Nigeria’s Unlimited Supplies of Capital were received. The NEIC notes that you have already contacted Mr. President and the Governor of the Central Bank on the same subject matter. This development forecloses further consideration of your proposal by the Committee until Mr. President concludes his

consultation on the matter.” Subsequently, my colleague and I sent copies of the paper titled “A LIBERALIZED FOREIGN EXCHANGE MARKET: “A Proposal for a Liberalized Foreign Exchange Market in Nigeria and its Economic Benefits” to the Heads of Department of at least 12 Nigeria Universities for evaluation and feedback; sadly, there was no response or acknowledgment from our Ivory Towers, even though the

It would be unconscionable for states and other agencies of government to be excluded from such liberty or privilege

mails were all delivered by DHL courier. Indeed, the Head of Economics in a prime Nigerian University hurriedly shooed us out of his office, after we introduced the object of our mission. Similarly, NISER’s (Nigerian Institute for Economic & Social Research) concluding response to our paper in their letter of December 2, 2002 is as follows: “The study does not recognise the constitutional provision for the collection and maintenance of the Federation Account”. Also, “The study suggests that

earners of dollars (public and private) should be able to sell when necessary through their bankers. I think this may further compound the existing information asymmetry in the foreign exchange market especially, if for example, the three levels of government – federal, state and local governments – are allowed to trade with their revenue allocations (in dollars) at the foreign exchange markets through their bankers.” Over 12 years have rolled by since our engagement with NEIC and NISER, and despite the unceasing advocacy in weekly Newspaper columns and countless interviews on Radio and Television, surprisingly, the Academia has remained totally mute despite of the clear reality that existing monetary strategies were taking us nowhere. The foregoing may explain why I consider Prof. Tella’s recent public endorsement of the proposal for adoption of dollar warrants as a very courageous decision which probably distinguishes him as a true scholar with the pursuit of TRUTH as his Northern Star! Hopefully, Tella’s intervention will bring forward other lovers of truth to support the adoption of a reform that has the potential of positively changing our lives, by throwing overboard the oppressive burden of ever surplus Naira so that low inflation and interest rates will become achievable to drive consumer demand and spur rapid industrial expansion with more job opportunities. The Economic Management Team certainly recognises that high inflation and interest rates are the wrong medicines for an economy that has

Save the Naira, Save Nigeria!!

Business & Economy FG must give greater incentives for local production — Agbakoba BY GODFREY BIVBERE

enior Advocate of Nigeria, SAN and former President of the Nigerian Bar Association, Olisa Agbakoba has said that the federal government must give greater incentives to local industries to ensure growth in the production. Speaking with journalists in Lagos, Agbakoba said that government policies in the past has not been favourable to local productive sector, stressing the greater intent in terms of tax holiday, conducive environment and the right C M Y K

policies to protect them. He also blamed government hike on duties and taxes on certain goods as a disservice to the economy rather than the discouragement of Nigerians from the importation of such goods. He charged government to make duties, charges and taxes on such selected cargoes competitive with what is obtainable in the sub-region to discourage the shipment of Nigerian bound goods to neighbouring ports. He explained that it is the same principle of cheap goods that the government of China

is using to dominate the world’s trade today. Government should work at achieving the same principle in the nation’s international trade, especially with the falling oil price that is threatening the 2015 budget. He further said that the nation’s policy framework is outdated as it has not been reviewed in the last 28 years, resulting in ports in the country becoming uncompetitive and shippers been dominated by foreign interest.

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