Financial 25042016

APRIL 25, 2016

Multiple woes hit outdoor advert sector Operators complain of unpaid bills, zero orders, regulatory issues

BY PRINCEWILL EKWUJURU

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perators of outdoor advertising business in Nigeria say their survival is under threat if government fails to come to their aid, as they accuse the Lagos State government of owing them over N1 billion.

The N1 billion is the total sum resulting from allotted sites for President Muhammadu Buhari and Governor Akinwunmi Ambode's 2015 election campaign, Financial Vanguard, FV authoritatively gathered.

The

practitioners under the aegis of Outdoor Advertising Agencies of Nigeria, OAAN, among other things decried the inability of member companies and clients to access foreign exchange to bring in raw materials for production.

The Association also complained of high rate of charges by states on both redundant and occupied billboards.

President of the Association, Babatunde Adedoyin told FV that the sector is groaning under serious economic crunch which is noticed on about 70 percent of member company billboards nationwide.

Adedoyin also noted that the present

economic situation is forcing clients to cut their advertising budget which has taken toll on member companies.

Speaking to FV, the OAAN President said: “The economy for us is in total recession, in a situation like this, there is no way it would not affect our industry.

As we speak, about 70 per cent of our billboards are redundant. Clients are cutting budgets. Some are not sure of what they want to do this year and some can’t even access foreign exchange to bring in raw materials and since they do not have raw materials they can’t produce, hence they can’t advertise.

“For the first quarter of this year, there

TOUR: From left, Former Governor of Kebbi State, Senator Adamu Aliero; CBN Governor, Godwin Emefiele; Minister of Agriculture, Chief Audu Ogbe and; Kebbi State Governor, Alhaji Atiku Bagudu, during the assessment tour of ANCHOR Borrowers Programmes in Kebbi State over the weekend.

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are no media orders from most companies, some of them are still trying to put things together because of the uncertainty that we are facing today.

That is the basic truth and I can’t start mentioning organisations. Some are even owing the last two quarters of last year; I am talking about multinationals.”

Adedoyin went further to say, “the regulators are looking for money; Lagos State Signage and Advertisement Agency, LASAA is trying to collect money at all costs and everybody is looking for ways to get money from operators because allocation coming from the centre is little or nothing, therefore most of them are now thinking that there are internally generated revenues, IGR, and unfortunately those of us they are trying to get the money from are having the same problem.

“Our clients are not doing well, they are not giving orders, they are not paying. This is not peculiar to Lagos it is in all the states. Right now, our boards are being pulled down in Kaduna, Rivers, Abuja and we have been to all these places and the story is all the same except that charges in Lagos is higher may be because they are the pioneer of these agencies. For sure, we don’t have any sympathy from them, that is the truth.”

On whether Lagos and the association have been able to strike a rapport, he quipped: “First and foremost we have not settled anything with Lagos. We are still discussing. We are trying to arrive at an amicable solution. We are praying and hoping that in a short time this would come to an end. You know this is a professional association and as a company you are compelled to practice in all the states of the federation. We have some of our members practising in the East, in the West and those practising only in Lagos, and whatever policy that we have, members should be safe whether practising in Lagos or elsewhere. That is why we decided not to hold our annual general meetings in Lagos alone.

"As I speak someone is in Kaduna and Abuja doing some discussion with the regulators there. It is a professional association and the policy is the same whether you are in Lagos, Abeokuta or Uyo their problem there is our problem here. Because today you might be in Lagos and tomorrow may want to practice in Uyo." Continues on page 18

18 — Vanguard, MONDAY, APRIL 25, 2016

Cover

Entrepreneurial revolution: The way for ward ffor or Nigeria orw INAUGURATION - From left, Victor Gotevbe, Secretary-General, Chartered Institute of Strategic Managers and Leaders, CISML Nigeria; Dr. Austin Izagbo, President/Chairman, CISML Africa; Dr. Hayford Alile, President-General, CISML Global and Prof. Joseph Mba, Registrar-General, CISML Global during the inauguration of principal officers of CISML Africa in Lagos recently.

Multiple woes hit outdoor ad sector Continued from page 17 On what drives rates, Emmanuel Ajufo, Vice President of the association stated that "there was a fixed rate, but with the advent of LASAA, the rate went up by over 1000 per cent and so the regulators want to make money, but like we keep telling them, Nigeria today has oil but have nowhere to sell it.

“We are telling them to allow us pay to the extent we have also received but they are not reasoning, and we must get them to understand that. "If they can take what has been received, then they should also allow us to pay what we have also received.”

Corroborating the President’s statement, Ajufo said further that the association has been battling with LASAA on the issue of vacant billboards.

He said: ”We are the endangered specie, whatever money we spend, come from the advertisers.

“The regulators still insist that we must pay them the same amount of money we pay when the billboards were occupied.

Where do they expect us to get the money from?"

On raging debt controversy, the VP admitted that members are owing LASAA, but it is as a result of charges on vacant billboards.

“We are saying to LASAA that we did a job for them and we had an agreement with people that gave us the job and LASAA is saying that they do not know that agreement and we believe that government is a continuum and very soon this present management of LASAA will be a thing of the past. I do not know why people do not learn from the past. I don’t know OAAN will enter agreement with somebody and when the current leadership departs and another comes in and it will begin to say it doesn’t know anything about such agreement.

We are still talking about this thing and we expect LASAA to set aside those debts until we resolve them because we are claiming that money and he is saying that he doesn’t know about the money and he is still dealing with us on the account of the money that we expect him to pay us.

Continuing, the VP stated: “it is not possible for us not to owe because we can’t walk into the bank and take a loan to pay for vacant billboards. We believe as regulators, they must understand the environments they regulate and they must also know that a percentage of what we give to them come from advertisers and they (advertisers) have the right to take their money to anywhere they want. We are here today talking about this rate being too high and we are asking them to bring it down and let us pay as we received, but they said no.

“Presently, we are having issues in Kaduna, don’t forget the present Kaduna governor was the one who did what he did in Abuja so he wants to do the same thing in Kaduna. They started by saying beautify the environment and at the end of the day it is rate increase and so it is very clear

We believe as regulators, they must understand the environment they regulate and they must also know that a percentage of what we give to them come from advertisers

we need to come down to address this issue."

LASAA’s defence: The said Lagos State Signage and Advertisement Agency, LASAA, the agency saddled with the responsibility of regulating outdoor practice in Lagos, was said to have embarked on Save Our Soul agreement on behalf of the APC to rally support for its candidates both within the State and at the federal level through the provision of sites for adequate exposure.

Although the agreement was said to have been reached by both the regulator and the operators prior to the election, the new administration of LASAA led by Mobolaji Sanusi has denied any arrangement or deal claiming that the former helmsman, George Noah, acted on his own.

Sanusi while denying the claim stated that the party made available some funds for the execution of the campaign and as such the immediate past head should be held responsible to account for it.

While LASAA under Sanusi is insisting that it was the operators that owe it for the stated period, the operators believe the new administration was being unfair by asking them to go after Noah for the payment when the agreement was reached.

To the operators, it was quite surprising that the same LASAA whose staffers were privy to the agreement could make a U-turn on the issue.

The operators further revealed that some members had to relinquish previous agreement reached with the Peoples Democratic Party (PDP) in order to key into what the regulator proposed to them.

Part of the agreement reached between both parties, according to a source, include defraying the cost incurred by each of the operators on the usage of their sites for Buhari and Ambode campaigns by clearing off either part or all the debt owed.

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or Nigeria’s and Africa’s women, youth, rural populations, the urban poor, the underemployed and unemployed, the current economic realities offer no hope for a change in their circumstances. Mass poverty is endemic across the continent, and shows no signs of waning.

Most of Africa’s 54 countries are consistently listed among the low and low-medium human development societies. What is required to transform this situation is a radical break from the past. What is required is an entrepreneurial revolution devoted to providing goods and services that take advantage of the large domestic and regional markets and opportunities of a globalised economy. But this will not happen by wishful thinking. It requires a profound shift in individual mind-sets and a fundamental reorganisation of government policies and practices.

It will not happen overnight, but it can happen. Pursuing such a revolution, practical, directed steps can be taken immediately to encourage the entrepreneurial vision, talents and efforts of Nigeria’s, and Africa‘s populations. The entrepreneurial revolution is key to poverty alleviation. Such a revolution holds out a realistic hope for the future of Africa’s 1 billion people.

Entrepreneurship is the surest way for a nation to meet those goals and to develop prosperity for the greatest number of people. In fact, government activities should focus on supporting entrepreneurship not just to meet these measurable targets, but to unlock people’s mind- set, to allow innovation to take place and to enable people to exercise their talents. In all people, you find different kinds of talents, and entrepreneurship is about harnessing those talents, and making sure that it takes people to another level in their personal development. So, it is important for government to develop the private sector and to create an environment that enables entrepreneurs to flourish. We are focused on lowering the costs of electricity, providing access to finance, building roads, and training managers.

Change has to start in the mind. And that is what we have been working on over time. Once the mind gets correct, the rest becomes simple. This entrepreneurial mind-set must inform our actions whether we are in the private sector, government, or civil society. This mind-set must inspire our entrepreneurs to aim ever higher. It must compel our civil servants to reinvent government. It must encourage our civil society to work for the greater good. Ultimately, this mind-set holds the key to our prosperity, our development, and our future.

Entrepreneur and government working together in publicprivate partnerships to pursue economic opportunities is the essence of the entrepreneurial revolution. The entrepreneur in his entrepreneurial activities can bring about increase in production and create employment, income and facilitate rapid growth of micro, small, medium, and large scale enterprise to reduce poverty and hunger among the people.

The World Bank’s country partnership strategy (CPS) for Nigeria out lines basic requirements for sustainable growth: -Improving governance, Maintaining non- oil growth, and promoting human development. The World Bank’s CPS and Nigeria’s NEEDS strategies serve as a summary of key initiative that government must focus on in order to drive a sustainable entrepreneurial revolution. These initiatives include: · Creating a collective socio-economic atmosphere that encourages entrepreneurial development to its fullest and widest capability. This includes tackling infrastructure deficits (in roads, power, and communication) that elevate the cost of doing business and mortality rates. · Addressing systemic imbalances in terms of policy design and implementation, together with effective measures against institutional corruption.

Vanguard, MONDAY, APRIL 25, 2016 — 19

Here are some interesting reactions to the issue raised on this column last Monday Onu Igala f the writer of this article saw the breakdown of internally generated revenues (IGR) by States, he would not have held his breath for Fiscal Federalism. If the core North gives you fiscal federalism, what is then the attraction to seize federal power by all means? Check this out, Kano State gets the highest allocation from the federation account by State and LGAs, while its IGR is not even among the top ten in the State

by State list. Yes, why would the core North be asked to collect taxes when they can collect so much from the federation account? Easy money. Even my our so-called leaders from all small Kogi collects more IGR Victor Inyang-Edung than Katsina State. But Katsina The resources from Akwa Ibom walks of life – political, religious State ranks second when it is what Kano is using to pay and ethnic. Rather than seek or comes to sharing the allocation salaries, build roads and promote causes for national from the federation account by whatever they call development, unity, they would rather States. So, to the core North, it can you tell us what Kano and sponsor or lay foundation for is unitary fiscal government or the entire North is bringing to divisions for their ulterior nothing so that they can the federal purse for sharing? motives based on selfcontinue to control the federal Akwa Ibom, the rest of South- aggrandizement. Apt as the purse and appropriate it to South and South East are advisory by the National Council, as themselves using criteria like justified to collect 50 per cent Economic encapsulated in this article, on landmass and census figures. as it was before the civil war. going back to the basics of fiscal You just highlighted the real federalism may seem to the Matthews I problem with Nigeria. People The problem does not so much entire developmental process of can shout Sai Baba all they want, there is no way in blue dwell on the absence of the nation, without genuine blazes someone like Buhari can knowledge or the unawareness commitment, this may well instill fiscal federalism into the of our pitfalls as a people and seem like returning to the system. To maintain its control nation but rather, on the non- bridges that have been burnt. over Nigeria’s resources and existence of political and moral military, the North has to will power to reason together as continue to uphold the myth of one people in resolving issues bigger population which confronting us. Failure and Of course, the justifies their appropriation of inability to tackle the basic major factor for our a lion's share of Nigeria’s causes of the so-called inherent, sundry wealth. Anyone who thinks deep-seated and mutual predicaments lies Buhari will bring about any distrust rooted in our political, fundamental change is living in religious and ethnic trajectory in our so-called a fool’s paradise. Real change would continue to bog us down leaders from all will see the North losing all their as an entity. walks of life – Of course, the major factor for age long privileges. I don’t see our sundry predicaments lies in political, religious that happening at all.

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Mr. President: Fiscal federalism will end Nigeria’s economic woes

and ethnic.

Economy

Dodo This is very correct, unfortunately, Nigerians are blind including their leaders.

This problem, if not adequately addressed, will affect our children. Nigeria’s problem is not about PDP, APC, religion or tribe. Buhari is not the solution to Nigeria's problem. How long are we going to blame every other person except ourselves?

We are all responsible for this very unsustainable structure we operate. Address this and change our educational system to focus on creativity and things will move in the right direction.

Alternatively, we can continue to live in self denial. I repeat, Nigerians are blind. Take it or leave it.

Eri Kingdom Fiscal Federalism must also include total deregulation of the telecom sector. Some will argue that at current stage, the sector is already deregulated, but a closer look at it will show more needs to be done. A situation where five network providers

occupy a space for 100 million cell phone subscribers is unacceptable. In fact, Nigeria with its large population, needs a minimum of 50 network providers, an average of one network provider per state in the federation. Any network provider with two million+ subscribers can sustain its business. States should be allowed to attract whichever provider they deem fit.

OkpomO Prince Yusuf The regions that suffer the most in this current lop-sided arrangement must organise themselves to get what they want, whether any other region agrees or not. They have everything at their disposal.

Oshimili Olatubosun PMB cannot deliver Nigeria; he is part of the problem. He will never address the fundamental issue of true /fiscal federalism, he can travel to the moon and borrow any amount or arrest all the thieves, yet he cannot deliver Nigeria from its current problems.

PIB: Need for even handedness

By VICTOR ATTAH

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f all the Issues that have threatened the stability of this country- religion, ethnicity there has been none as virulent as oil. This threat has been potentiated by the manner in which this product has been administered and mismanaged.

The effect of this mismanagement has spelt doom for our economy and brought total discontent to the people of the Niger Delta.

When militancy and the demand for resource control first started, the rest of the country accused the people of the region of wanting to secede. But, as I have had occasion to state in the past, it was never the intention of the people of the region to secede.

Rather our worry, which till today has not been adequately addressed, was, and remains, the fear that it is the rest of the country that has a hidden

agenda toward our oil. The suspicion has been expressed that the rest of the country intends to exhaust the oil and gas in such an uncaring manner as has left the region environmentally devastated, and at the end of the day bid us good bye.

We have therefore sought guarantees that this will not happen but none has been offered. We have sought meaningful participation of the States and local communities in the oil industry and this has been stiffly resisted. What we have instead is a contrivance called Petroleum Industry Bill (PIB).

The 1999 constitution of Nigeria as amended is very clear and states as follows: “Notwithstanding the foregoing provisions of this section, the entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of

Nigeria shall rest in the government of the Federation and shall be managed in such manner as may be prescribed by the National Assembly.”

Why is the National Assembly in such a hurry now to regulate the management of mineral oils only and not the other minerals with which Nigeria is so abundantly blessed?

The Chairman of the House of Representatives Committee on Public Petitions, Hon Uzoma Nkem Abomia, was reported as saying that the new Petroleum Industry Bill (PIB) proposed by the Nigerian senate is skewed in a manner that would breed more troubles and restiveness in the Niger Delta region, instead of solution.

I have read such screaming headlines as: “Plateau to explore solid mineral”; “Ondo partners US firm on bitumen exploitation”; “PIB: Nigeria mulls 40% sale of new oil firms”.

There is also a determination

to unbundle and completely reorganize NNPC. It has also been reported how “Experts make case for solid mineral policy”. The Hon. Minister for Solid Minerals, Dr Fayemi has been quoted as saying “There is nothing in any law in this country that prohibits States from being active participants in the development of minerals endowed in their States”. The Hon Minister went on to say “However, the Federal Government must actively encourage States to play a part. If anyone imagines that simply because someone has license (he) can just enter and start operating without some level of engagement with the local authorities; it’s a misnomer.

This is not the intention of our constitution. It is the residue of our authoritarian past that is still allowing people to feel that that is what exclusivity refers to.”

Why has this never been so with oil and in what way is the PIB expected to correct this

anomaly?

With the industry in a flux and with heightened activity in the solid mineral sector there is a compelling demand for even handedness in the formulation of policies to govern all minerals, solid as well as oil.

The Petroleum Industry Bill therefore should wait and let this country make up its mind about how all minerals in, under or upon land or water in Nigeria are to be uniformly administered for the good of all.

Whatever else we do not do, in the long run, the aim must be to put the country back on the firm compass of true fiscal federalism. There can be no doubt that all these agitations for secession, renewed militarism and even maybe Boko Haram, have their roots in the fault lines of our distorted and fractured federalism. * Obong Victor Attah is former Governor of Akwa Ibom State

20 — Vanguard, MONDAY, APRIL 25, 2016

Business & Economy

By FRANKLIN ALLI

We're major employers of labour — Golden Lotto

By ONOZURE DANIA

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he Managing Director of Golden Chance Lotto, Charles Arthur has said that the establishment of the company has contributed immensely to the development of man power in the country.

Arthur said many youths have benefitted from the job opportunities provided by the company.

He stated this during the award ceremony of the 30 SubAgent whom he claimed have worked tremendously and was able to meet a certain target that was given to them.

“Our company which is among the big companies in Nigeria, has changed so many lives, before now, you see a lot of youths underneath the bridges who steal and snatch bags from people because they are hungry, but we empowered them through this Lotto business” he said.

All the awardees got different prizes which ranges from Tricycle, double door deep freezer and a Plasma Television.

According to him, the Lotto Company is now operating in 28 states of the country and we are still doing more, this is the fourth time we would be rewarding our agents.

He added that the Golden Chance Lotto Company is a registered company with Lagos state government and the Federal government.

Arthur urged the government

Olam to invest $150m in poultry sector

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lam International says it is making $150 million investment in animal feed mills, poultry breeding farms and a hatchery in Kaduna and Kwara state.

Olam CEO for Africa Venkataramani Srivathsan, who disclosed this in a statement, said: “Domestically produced meat is being hampered by a lack of good quality feed, support for farmers and availability of young stock, but consumption is set to increase.

“By investing in poultry and fish feed, we can utilise the wheat bran from our wheat milling operations, as well as maximise our sourcing networks to buy corn and soy from local farmers. Our investment in the hatchery will help boost poultry production and, in the long run, help reduce the country’s reliance on import.”

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he Consumer Protection Council, (CPC) , weekend, clamped down on traders at Oregun area of Lagos state for selling fake gas filters and other mechanical products.

Selling fake products in the market, CPC said contravenes consumers’ rights to value for

CPC clamps down on fake gas filter traders money.

The Head of Lagos Operational Office, CPC, Mr. Joshua Nggada, who led the enforcement that lasted up to an hour, said CPC has the

mandate to protect the interest of the consumers and promoting their welfare.

He said that the Council is determined to make sure that all products that are

RECEPTION - From left: Director, Legal & Regulatory, Airtel, Shola Adeyemi; Chief Executive Officer, Teledom Group International, Dr. Emmanuel Ekuwem with 1st Vice President, Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola during the Special Reception held in honour of the Communications Minister in Lagos.

Why SON chases containers on highways — Angya T he Acting DirectorGeneral of the Standards Organisation of Nigeria (SON), Dr Paul Angya, has given reasons why the agency ’s standard enforcers have resorted to chasing trailers and containers on the highways rather than other less risky methods of enforcing standards Angya who was speaking to stakeholders in the nations’ maritime sector at a forum in Lagos, said the reason is because, contrary to general impression, the SON had long been sent out of the nation’s ports, and had no alternative than to seek other ways of carrying out its statutory functions. ‘’As I speak to you, SON is not at the ports. SON can only go the ports at the invitation of the Customs.

We are begging to be allowed to come to the ports to do our jobs, but we cannot force our way into the ports.”

Angya said that result of the current position of things is that up to 60 per cent of the containers that arrive the nation’s waters leave the ports without inspection by the SON, with obviously negative implications.

Angya saiD: ”Put us at the ports, we will hold unscrupulous importers. SON

was removed from the ports to facilitate trade but that trade is killing Nigeria and Nigerians now.

"We can’t continue like this.

Our young ones can’t get jobs because there are no manufacturing companies. Our manufacturers have gone to China and other places.”

According to him, the Comptroller of Customs has however been receptive of SON’s initiatives for a collaborative way of policing the ports more effectively, adding that modalities for that had already been established in the course of recent meetings and deliberations.

hazardous and substandard are removed from the markets.

According to him, this is done through routine surveillance and consumer tips from the public.

He informed that the council had received consumer tips that fake fleet gas products and filters are being sold in certain locations in Lagos, especially in Oregun, Ikeja “We went into surveillance and discovered that several outlets are selling these components that have identified some of the shops with what they are selling.

After the due diligence and we have identified the source, we have to now remove them from the market”, he said.

Similarly, the council’s Head of Surveillance and Enforcement, Lagos Operational office, Mr. Camillus Anyawu who led the enforcement exercise told newsmen after the exercise said the enforcement was to protect consumers’ interest and right.

According to him, many consumers are ignorant of what they are buying but when they are sensitized, they know better.

“Education has to come from two angles because the person selling has to inform the consumer what the product is all about. The consumers have opportunities to 3 Rs, repair, return or refund but unfortunately, many consumers are not aware while traders too don’t give room for such”, he stated.

We have confidence in Nigerian economy — Bosch

By PRINCEWILL EKWUJURU

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he Chief Operational Officer, Bosch Worldwide, Dr. Michael Schoellhorn, has expressed confidence in the Nigerian economy, saying its population and growth prospect is among other attractions that propelled investment of Bosch in the Nigerian market. While opening its first showroom in Africa located in Lagos, Schoellhorn said he has confidence in the Nigeria economy, and no doubt that the Nigerian market would benefit immensely from the quality of products and services Bosch is bringing to the table.

“We are expecting a lot in Africa and indeed Nigeria considering the size of the population and the potentials it has for growth. We have no doubt that the Nigerian market would benefit immensely from the quality of products and services we are bringing to the table,” he said.

Also, the Head, Africa Region of Bosch, Mr. Novert Klien, who was also at the well-attended ceremony, said Nigerian consumers, would find their array of quality home and kitchen products very useful and hard to resist.

Corroborating, Chief Executive Officer of Pedini Nigeria Limited, Mr. Chiedu Nwokolo, said many of the products they are bringing into the market are targeted at addressing the day to day challenges faced by many Nigerians especially with appliances used in kitchens. “At Pedini, we decided to partner with Bosch in solving some of the problems encountered by many Nigerians in the kitchen because they are the most reliable brand in the entire continent in terms of durability, quality and technology.

“We are very confident of the Nigerian economy, the size of the market and also in the quality and pricing of our products which are tailored to compete favourably well in the market. We intend to build between 50 to 100 Bosch-branded stores across the country over the next three years. This is to further serve the Nigerian public better,” he said.

However, the Managing Director of BSH South Africa, Enrico Hoffmann, said the products are “invented for life, adding “Bosch home appliances provide precision technology and European design, which simplifies life in every kitchen.”

Vanguard, MONDAY, APRIL 25, 2016 — 21

Banking & Finance

VISIT - From left, ECOWAS Commissioner for Finance, Sesay Allieu, Managing Director of Ecobank, Mr Charles Kie chatting with President of ECOWAS, Marcel Alain de Souza and ECOBANK Deputy Managing Director, Foluke Aboderin during a courtesy visit by Management of ECOBANK to ECOWAS Secretariat in Abuja.

African firms cut investments as business confidence wanes —Survey

BY BABAJIDE KOMOLAFE

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ore than half of African businesses reduced investments in capital projects in the first quarter of the year due to gloomy economic outlook and declining business confidence.

This was one of the highlights of the latest Global Economic Conditions Survey conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA). The Global Economic Conditions Survey (GECS) is the largest regular economic survey of accountants in the world.

Among other things the survey revealed that 55 percent of African businesses said that they were less confident about the economy, while 61 percent cut back on capital investment.

The report stated, “China’s investment slowdown and the resulting collapse in commodity prices have hit business confidence in Africa hard. In Q1, 55 percent of businesses said they had become less confident about the outlook – well above the global average of 48 percent.

“More firms in Africa than anywhere else (61 percent) were cutting investment in capital projects, and the continent is also the region where businesses have the biggest problems with rising costs and foreign exchange movements, with many of the region’s economies suffering sharp falls in their currencies in recent quarters.

“The region’s largest economy, South Africa, is C M Y K

going through a particularly disastrous spell. President Zuma is under pressure to resign, and a once-in-acentury drought is sending food prices soaring.

“The situation is not much better in Nigeria, Africa’s second-largest economy, where speculation of currency devaluation is mounting and the government is struggling

to cope with a collapse in its revenue as oil prices have fallen.”

At the global level, The GECS showed that in Q1 businesses were less optimistic about their prospects than at any other time in the past four years.

Almost half of the firms surveyed said that they were more pessimistic about their

prospects than they were three months earlier. Less than one quarter had become more optimistic.

It also showed that more than half of firms are either cutting or freezing employment, while only 14% are increasing investment in staff. As many as 42 percent of firms are cutting back on investment, up from 40 percent in Q4 2015. Almost every region saw an increase in the number of businesses cutting capital expenditure last quarter, with North America the most notable exception.

Commenting on the outcome of the survey, “Toyin Ademola, Country Head ACCA Nigeria said, “The economic issues facing the world are not limited to Nigeria, it is the emerging markets more generally that are suffering most from bottom lines being squeezed. Wages are rising rapidly in many parts of the world and businesses are finding it harder to cope as revenues come under increasing pressure. The sharp drop against the dollar experienced by many currencies will also have pushed up costs, making imports more expensive and raising the value of dollardenominated debts. All these mean that firms in emergingmarket economies are very pessimistic about their prospects.”

Heritage Bank introduces MyHeritageReward, HBConcourse

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eritage Bank has introduced two customer reward programmes, MyHeritageReward and HBConcourse, designed to appreciate and encourage customer loyalty.

While MyHeritageReward is a loyalty programme in which customers win mouthwatering prizes as they use the various electronic channels of the banks, the HB Concourse is a meeting room fully furnished with relevant office equipment and designed to afford the small business owner or beginner, who are customers of the bank, space to hold brief business meetings and conclude deals with his own clients at absolutely no cost.

Managing Director/Chief Executive Officer of the bank, Mr. Ifie Sekibo, said that the two programmes demonstrate, “Heritage Bank's commitment to supporting customers in wealth creation, preservation and transfer across generations.”

These programmes, he noted, are some of the innovative ways through which we can show appreciation to our customers for being part of our success story.” For MyHeritageReward, customers are required to sign up online on the platform, www.myheritagereward.com, using their mobile phone numbers, which enable the creation of a customer profile with a passworded access. From this point on, the customer earns points which enable him to graduate from class to class while winning commensurate prizes as he actively uses the bank’s POS,

internet and mobile banking, ATMs and cards among other eBanking products.

The uniqueness of the MyHeritageReward is in the ability to view milestone progress made by customer like, bank transaction channels, membership class, milestone boosters and cashbacks as well as an inquiry service that gives the customer access to point balance, ranking, rebate purse in addition to entertaining games and contests like Goldfinger and Brain Quest among others.

The prizes to be won range from airtime across all networks, smart phones, business, shopping vouchers, generators, inverters to a brand new vehicle.

Apart from saving cost for the newcomer in business and SMEs, the HB Concourse also provides convenience for clients travelling out-of-State for business to naturally conduct their meetings or appointments without worrying about office space among others.

To use these meeting rooms such customers of the bank will have to go through asimple booking process online, which are mere formalities to avoid clashes of meeting times with fellow customers who also want to use the same facilities.

These concourses are currently available in five key locations in Abuja, Lagos, Ibadan and Port Harcourt. Each concourse is furnished with office chairs, conference table, airconditioning, projector, flat screen TV, telephone, internet/WiFi and crockery for tea/coffee.

Greece bailout talks make ‘progress'

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urozone finance ministers say they have made progress in talks about the bailout programme for Greece. But they said after a meeting in Amsterdam on Friday that further work was still needed.

They said they are hopeful that an agreement can reached in the next few days and are ready to call an extraordinary meeting. That would pave the way for the next payment under the bailout.

Once again a review of the Greek government’s policies has been delayed by months.

So has the next payment of financial assistance. This review, the first under a new bailout of more than 80 billion Euros and agreed in August 2015, was originally supposed to be completed last year.

The tone emerging from a meeting of eurozone finance ministers was, however, relatively positive. There has been progress, they acknowledged, but they want to see more in a number of areas, including privatisation and the strategy for the government finances.

That latter of these is also at the centre of a dispute between the finance ministers and the European Commission on one side and the International Monetary Fund on the other.

The IMF is sceptical about whether the measures under discussion are sufficient to meet the targets for reducing the government’s finances a surplus in the public accounts before interest payments on its debts equivalent to 3.5 percent of national income, GDP. The IMF is also doubtful about whether it’s realistic to expect that target to be achieved at all over a long period.

One way that the euro group is trying to narrow the gap with the IMF is seeking an agreement on measures that Greece would automatically take if it misses its financial targets. If all were to go to plan, they wouldn’t be needed, but they would be available as a backstop if needed.

The IMF has another concern. Its view is that debt relief is needed and that’s why it is not contributing financially to this, the third bailout, though it did provide funds for the first two.

22 — Vanguard, MONDAY, APRIL 25, 2016

Banking & Finance

Fortis MFB gives out N15bn loan to 64,000 customers

BY EMMA UJAH, ABUJA BUREAU CHIEF

F

ortis Microfinance Bank Plc has given out a record N15 billion in loans to 64, 000 customers in addition to financially empowering over 100, 000 clients.

Managing Director/Chief Executive, Fortis MFB, Mr. Tiko Okoye, disclosed this in Abuja, at the weekend during the presentation of the Client Protection Certification by the Smart Campaign.

According to him, Fortis has maintained a leading position among the Ficrofinance Banks (MFBs), in the country, been the first to receive the Client Protection Certification by the Smart Campaign.

Speaking on the Smart Campaign Certification, the MD said, “Fortis is a microfinance bank that takes good care of its customers because customer interest is foremost in whatever we do here.”

He stressed that the bank pays particular attention to the successes of its clients and does much more than just merely transacting businesses with them.

According to him, “We have always held a strong commitment to protecting our clients, but this independent validation lends credibility and demonstrates to our esteemed clients and our industry that we continue to work every day to improve our service and our commitment to best practices in microfinance.

On the Smart Campaign Certification, he said, “The certification we have just received underscores our commitment to customers.

We make sure that there is transparency in pricing.

We make sure that there is no hidden condition in our facilities, as it is said, no reading between the lines.

With Fortis, what you see is really what you get.

“And we must thank our partners, FMO. They have been very crucial in taking us through the process. And again I say that the Smart Campaign, the Customer Protection Principle (CPP) is central to our activities in this bank.

C M Y K

‘Naira/Y uan sw ap'll increase ‘Naira/Yuan swap'll Nigeria’s dependency on China’ Neutral effect on exchange rate STORIES BY BABAJIDE KOMOLAFE

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he Naira/Yuan currency swap agreement between the federal government and Chinese government will increase dependency of Nigeria on China, said Financial Derivatives Company Limited (FDC).

In an analysis of the deal titled: 'Naira /Yuan Currency Swap: The Mother of all Deals - Nothing to Cheer’, the Company stated that, “While the objective of the swap deal is to correct the trade imbalance, the reality is that the deal will increase the dependency complex and parasitic relationship between Nigeria and China.

Despite its drawbacks and more important, it will provide a negotiating platform for Nigeria to extract better trade and investment concessions from other Western countries.”

The Company also noted that currency swap will not have any effect on the exchange rate of the naira, and it would not help curb inflation.

“Will this transaction make the Naira stronger in the Forex markets? No. The impact on the currency pressure is neutral. This is because the swap deal does not increase the inflow of forex into the country.

“Will this deal help curb inflation? No. This is because the root cause of the spike in consumer prices is the scarcity of forex exchange

and other cost push factors.

The currency swap deal has not addressed this issue.

Therefore, the problem of soaring inflation remains.”

Explaining how the swap will work, FDC said, “The Central Bank of Nigeria (CBN) will convert a certain portion of its external reserves say $3bn to Naira (N200 x $3bn = N600bn) and deposit with the Peoples Bank of China.

The Chinese government will give Nigeria the Yuan equivalent of $3bn.

Nigerian trader wants to import spare parts from China

will approach Nigerian bank, and pay N40m for $200,000 (at N200/$). The Nigerian bank will open letter of Credit (L/C) confirmed by Industrial and Commercial Bank of China (ICBC). The Nigerian bank credits ICBC with N40m, goods are shipped and documents negotiated. ICBC is long Naira and short Yuan.

If ICBC needs to import goods from Nigeria i.e. oil at $43pb, it will pay NNPC with naira at $43pb x N200.

Consequently, Nigerian oil exports to the rest of the world will reduce by the volume

sold to China. Nigerian Yuan earnings increase and dollar revenue reduces by the same amount. Impact neutral on external balance. Nigeria will end up importing more from China and selling more to China. EUREKA! EUREKA! It is the economic equivalent of Archimedes’ principle: The Yuan volume is the object that is immersed in the Nigerian dollar pool. The amount of Yuan will be equal to the dollars displaced. In the end oil revenue will not change and import volume will not. Destination of exports and origination of imports is all that will change.”

The Company noted that while the currency swap will, “boost bilateral trade volumes between Nigeria and China, it will also increase dependence on China for imports of raw materials and equipment.

PRESENTATION - From left: Group Head, Retail Banking Unit, Skye Bank Plc., Nkolika Okoli; a winner of N100,000 consolatory cash prize, a Jewelry Seller, Okoro Akonam and Team Lead, Small Business Group, Osolo Way Branch, Skye Bank Plc., Femi Shobande at the tenth cheque presentation to winners in the ongoing Skye Bank’s “Reach for the Skye” Millionaire Reward Scheme held in Lagos on Thursday, April 21, 2016.

Interbank rates to fall as N396bn boost market liquidity

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ost of funds are expected to fall this week due to inflow of N396 billion from statutory allocation funds and payment of matured treasury bills.

Meanwhile, Federal Government bond prices fell sharply last week due to increase sell pressure from fund managers.

In its review of activities in the interbank bank money market last week, Cowry Asset management Limited noted that “In the just concluded week, Nigerian Interbank Offered Rates moved in mixed directions amid treasury bills auctions accompanied by Federation Accounts Allocation Committee (FAAC) disbursement of N299.7 billion. “During the week, Central Bank of Nigeria auctioned Federal

Government Bonds (all reopenings) worth N167.52 billion on Wednesday, 20 April; viz: 91-day bills worth N36.79 billion (marginal rate (MR) rose to 7.88 percent from 6.10 percent); 182-day bills worth N35 billion (MR rose to 8.99 percent from 8.69 percent) and; 364-day bills worth N95.73 billion (MR rose to 10.25 percent from 9.49 percent).

“The outflows were offset by inflows worth same amounts and tenors; hence, NIBOR for overnight funds, 1 month and 6 months tenor buckets increased w-o-w to 5.58 percent (from 4.54 percent) and 10.43 percent (from 10.39 percent) respectively while NIBOR for 3 months and 12 months tenor buckets fell to 8.33 percent (from 8.38 percent) and 12.35 percent (from 12.48 percent)

respectively.

“Meanwhile, yields on the Nigerian Interbank True Treasury bills increased for all maturities on sustained sell offs – yields on the 1 month, 3 month, 6 months and 12 months tenors increased to 3.90 percent (3.54 percent), 6.81 percent (from 6.50 percent), 9.43 percent (from 8.88 percent) and 10.98 percent (from 10.55 percent) respectively.

This week, N96.36 billion, 274-day treasury bills will mature on Thursday, 28 April 2016. We expect that the maturity coupled with the N299.7 billion FAAC inflows will help boost financial system liquidity and reduce interbank offered rates.

“In the just concluded week, Federal Government bond prices depreciated (and yields increased) on sustained bear

run. Week-on-week, 20-year, 10.00 percent FGN JUL 2030 debt lost N1.91 (yield increased to 12.97 percent); the 10- year, 16.39 percent FGN JAN 2022 paper plunged N3.25 (yield rose to 12.50 percent); the 7-year, 16.00 percent FGN JUN 2019 instrument depreciated by N2.47 (yield increased to 12.24 percent); the 5- year, 15.10 percent FGN APR 2017 paper declined by N0.25 (yield upped to 10.85 percent); while the 3- year, 13.05 percent FGN AUG 2016 bond shed N0.41 (yield climbed to 7.43 percent). At the London Stock Exchange, traded FGN Eurobonds weakened amid profit taking activity – the 10-year, 6.75 percent FGN JAN 2021 paper and 10-year, 6.38 v JUL 12, 2023 bond lost $0.38 and $0.43 respectively.

Vanguard, MONDAY, APRIL 25, 2016 — 23

Corporate Finance

*CBN Governor, Godwin Emefiele

*CEO, NSE, Oscar Onyema

Profits of 5 banks drop by N10.52bn in first quarter

By PETER EGWUATU

F

ive banks quoted on the Nigerian Stock Exchange, NSE have recorded a total Profit After Tax, PAT of N90.07 billion for the first quarter,Q1 financial period ended March 31, 2016, representing a drop of N10.52 billion or 10.5 per cent from N100.59 billion in the corresponding period of 2015.

The first banks are Guaranty Trust Bank, GTBank Plc, Union Bank of Nigeria Plc, Zenith Bank Plc, Ecobank Group, and United Bank for Africa, UBA Plc. Similarly, the five banks recorded a total Profit Before Tax, PBT of N106.29 billion for the three months period ended March 31, 2016, indicating a drop of 11.15 per cent from N119.63 billion recorded in each of the banks’ financial performance for the first quarter 2016 as released on the Nigerian Stock Exchange, NSE, last weekend, show that Guaranty Trust Bank, GTBank Plc continued to consolidate on its position recording moderate growth from its core banking activities.

However, decline in trading and revaluation gains occasioned by Foreign Exchange, FX paucity robbed off on the impressive performance recorded with a 4.6 per cent decline in gross earnings to N75.39 billion as against N79.02 billion in Q1, 2015 . The bank recorded a 6.1 per cent decline in PBT to N30.68 billion as against N32.65 billion in 2015 and 3.6

per cent decline in PAT to N25.61 billion against N26.56 billion in 2015. The bank also reported a post-tax Return On Average Equity ROAE of 24.19 per cent and Return on Average Assets, ROAA of 3.96 per cent respectively.

In line with the bank’s Risk Management strategy, the bank approached its loan growth with disciplined strategy, thus Non Performing Loans (NPL) of the bank for the period under review is still well within range at 3.51 per cent and Net Interest Margin (NIM) for the period under review declined marginally by 9 bases points , bps to 8.12 per cent from 8.21 per cent in Q1 2015. Commenting on the

financial results, Segun Agbaje, the Managing Director and Chief Executive Officer of GTBank stated that “Despite a slow start in economic activity in 2016 and the extremely challenging business environment, the Bank recorded decent performance across key financial indices during the period.” He added that “We understand that there’s a lot more work to be done, we are however prepared for the challenges and opportunities that lie ahead the 2016 financial year.”

A review of the Union Bank of Nigeria Plc first quarter results show that PBT

dropped to ¦ 4.7billion from ¦ 4.9billion in Q1 2015; excluding gain on sale of subsidiaries which increased by 85 per cent to ¦ 4.7billion from ¦ 2.5billion in Q1 2015.

The bank’s PAT for the first quarter 2016 was N4.72 billion as against N4.91 billion in the corresponding period of 2015.

Union Bank recorded gross earnings of ¦ 26.6billion as against ¦ 29billion in Q1 2015; excluding gain on sale of subsidiaries which was at par with prior year at ¦ 26.6billion.

Interest income was up 5 per cent to ¦ 21billion as against ¦ 20 billion in Q1 2015.

This was as a result of improvement in asset yield from 14.36 per cent in Q1 2015 to 15.65 per cent in Q1 2016.

Commenting on the Union Bank’s first quarter results, Emeka Emuwa, Chief Executive Officer said:”Our first quarter results reflect steady progress on the execution of our strategic priorities. The Bank’s core PBT in Q1 2016 is up significantly by 85% to ¦ 4.7bn compared to ¦ 2.5bn in the same quarter last year. With the sale of nonbanking subsidiaries near completion, the Bank is now focused on growing and delivering results through its core banking business.

Customer deposits grew 9 per cent in the year to March 2016, compared to March 2015, reflecting increased customer confidence in our service channels, new product offerings and a reenergised brand identity.

Our priorities to sustain growth in 2016 remain focused on growing our deposit base and new customer acquisitions, as well as driving gains in transactional income.

FirstBank advances N12bn loans to SMEs to drive growth

By NKIRUKA NNOROM

F

irst Bank of Nigeria, FBN, Limited said it has advanced over N12 billion in credit facilities to Small and Medium Enterprises, SMEs, in the country to support their growth aspiration.

The bank also disclosed that it has disbursed about N200 million to-date from the Central Bank of Nigeria’s N220 billion Intervention Fund for SMEs. The Deputy Managing Director, Mr. Gbenga Shobo, stated these at the bank’s Economy & You forum with owners of small businesses in Lagos.

He lamented the poor rate of assessment of the SME Intervention Fund, saying that it would have been higher, but for basic problems associated with SMEs, especially unavailability of tangible collateral.

Shobo stated that guarantees is the way to go if lending to SMEs is to be increased, adding that most small businesses do not have right structures on ground to attract

bank lending.

“I think for us in Nigeria, we only determine whether a loan is accessible or not accessible based on the pricing, but there are other elements of lending that we need to look at.

Apart from the pricing, the precondition by way of collateral has to be available. Is it something we all have.

“There are SMEs that don’t have tangible collateral which is what the banks are looking.

So, the CBN Intervention Fund aside from making it available at a single digit of nine per cent also comes with some terms and conditions, which the banks and customers must comply with. For example, you have security, ie tangible collateral, you have Treasury Bills and cash deposit. So do all SMEs have all these,” he queried.

“So, that is why the disbursement of this Fund has been very slow. We are not going to affect that because it is not directly from bank’s pursue. It is CBN Fund and CBN has said there must be collateral. If First Bank for instance lends to a customer and the customers doesn’t pay back, the bank is liable.

UBN targets top tier 1 position in 2020, to grow deposit by 20%

By NKIRUKA NNOROM

U

nion Bank of Nigeria Plc has said that its target is to become one of the top tier banks in the country by 2020.

The bank further stated that it is poised to grow its customer deposit by 20 per cent in 2016 while significantly driving down cost and reducing its NonPerforming loans, NPLs. The Group Managing Director of the bank, Mr. Emeka Emuwa, who disclosed this at the bank’s facts Behind Figures on the Nigerian Stock Exchange, NSE, said the bank’s aspiration is to be a highly respected banking institution in the country by improving on the quality of its customer experience, quality of its earnings, clients’ base, its talent, as well as the quality of the banking platform.

He said: “Looking into the future, we expect to grow deposit a bit faster in 2016 because we have already made a lot of investments in alternative channels, we have made a lot of investments in our retail front, so we expect our customer deposit to go up a little faster by 15 to 20 per cent within the year.

“Our cost-to-income ratio, we closed 2015 at 67 per cent. In 2016, we expect that to be less than 65 per cent or 65 per cent at most. So, we will focus on taking out cost by being a bit more disciplined around purchasing and being a bit more demanding from service providers.

Return-on-equity, again, we closed 2015 at eight per cent, and we expect the number to push upwards to between eight and nine per cent in 2016,” he said.

On reducing the Nonperforming loans ratio which stood at 6.67 per cent as at full year ended December 31, 2015, the UBN boss said: “As our loan book continues to grow and grow copiously, the ratio of nonperforming loans to performing loans is expected to come down; that is what we see. In addition, for the loans are not performing, there are two things we are doing. One is actively working to make sure they perform and where they are not performing, we apply measures exclusive to us to get our money back. We have been able to use that in a number of cases and it worked pretty well. That is how we see the NPLs.” According to him, the bank’s robust transformation plans include portfolio enhancement which will help it enhance its business model and drive market penetration.

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24 — Vanguard, MONDAY, APRIL 25, 2016

Corporate Finance SEC set to revitalise commodity trading to boost agriculture Stanford SEED, Pan-Atlantic University, others partner TAMS summit SB Telecoms & Devices, organisers of the Time Management Summit, have entered into partnership with Stanford Institute for Innovation in Developing Countries (Stanford SEED) and Pan-Atlantic University (PAU) to deliver TAMS Summit, its forthcoming high-level time management conference. Stanford SEED is a Stanford Graduate School of Business-led initiative intent on ending the cycle of poverty in developing economies.

Others partnering institutions are the Chartered Institute of Personnel Management of Nigeria (CIPM), ConSat, TVC, Radio Continental and Inspiration FM. The theme of the summit is “From African Time” to “To On Time”: A paradigm Shift.” At the TAMS Summit scheduled to hold 19th May 2016 in Lagos, leaders of thought from Stanford SEED, Pan-Atlantic University, CIPM and other reputable institutions as well as the public and private sectors of the economy will converge to proffer solution to our curious national devotion to the African Time syndrome. Speaking on the partnership support, Mr. Afolabi Abiodun, CEO, SB Telecoms & Devices, expressed delight at the best-in-class institutional support garnered by the TAMS Summit. He stated that participation and support from Stanford SEED, Pan-Atlantic University and CIPM will deepen discourse at the summit.

“As an organisation renowned for its efficiency through its TAMS software, we are very excited that these institutions are supporting this initiative of national importance. By partnering with us, they are encouraging us to do more and their involvement will certainly deepen the conversation and also shape the expected positive outcomes,” he said.

BY PETER EGWUATU

I

n

a bid to boost agriculture and promote commodity exchange in Nigeria, the Securities and Exchange Commission (SEC) is set to revitalise commodity trading in the capital market.

Already, the commission is reviewing the Warehouse Receipt Bill currently before the National Assembly and has assured that it will actively advocate its passage.

This is in support of the policy thrust of the Federal Government to encourage investments in the agricultural and solid minerals sectors in a bid to ensure economic diversification and deepen capacity across the agricultural value chain.

Director General of SEC, Mounir Gwarzo said this while delivering a Keynote address at a Training Seminar organized by Africa Exchange Holdings (AFEX) on Commodity Trading and Risk Management in Abuja.

He said the 10-year capital market master plan which the Market is currently implementing is the blueprint for the growth and development of the market over the next decade and acknowledges commodities exchanges as critical for enabling investment diversification, risk management, price discovery and transactional efficiency and expressed strong belief that to boost Nigeria’s competitiveness, a thriving commodities trading

ecosystem must be developed.

The DG said “We believe this can be achieved by implementing the following strategic initiatives: Build a supporting and functional ecosystem for commodities trading; “Others are: Build Centre of Excellence in areas of comparative advantage such as for oil & gas, cocoa, etc Develop efficient commodities exchanges and trading platforms, Sponsor legislation to ensure Nigeria’s crude oil sales are traded on local exchanges and build capacity in commodities trading at the SEC and among market operators”.

He said that as Nigeria pursues policies aimed at diversifying the economy, creating jobs and hastening

socioeconomic development, it is becoming increasingly clear that Commodities Exchanges can play a crucial role in actualizing these lofty objectives as a detailed empirical study by the United Nation’s Conference on Trade and Development (UNCTAD) analyzed the impact of commodities exchanges on development in emerging markets.

Gwarzo said Countries that were part of the study are also emerging countries with the most vibrant commodities markets such as India, Brazil, China, Malaysia and South Africa. Among the many insights in study’s report is the fact that commodities exchanges play a central role in facilitating economic development especially by helping farmers to enhance

their marketing and risk management capacity (such as reducing their exposure to price and other production risks).

Nigeria he said, ranks number one (1)in global export rankings for commodities such as kolanut, shea nuts and shea butter, cassava, and yams and also feature in top exporters for other commodities such as cocoa, rubber, oil palm, cashew and sesame seed.

“Our ginger is reputed to possess the best aroma in the international markets. Export opportunities also exist for a wide variety of other agricultural commodities.

This simply magnifies the potential of our agricultural sector to contribute significantly to economic growth and development” he

AGM - From Left;Company Secretary, Dangote Sugar Refinery, Mrs Chioma Madubuko; Chairman, Dangote Sugar Refinery, Aliko Dangote, Acting Group Managing Director, Dangote Sugar Refinery, Engr. Abdullahi Sule; at the 10th Annual General Meeting of Dangote Sugar Refinery in Lagos on Wednesday. PHOTO;AKEEM SALAU

NASD OTC records N1.01bn transaction value in Q1

BY NKIRUKA NNOROM

N

ASD OTC Plc has said that investors crossed 144.36 million shares worth N1.03 billion in the market in the first quarter ended March 31, 2016 compared to128.12 million units worth ¦ 665.33 million traded in 150 deals in the preceding quarter 1, 2015.

NASD Plc is the promoter of a trading network that eases secondary market trading of all securities of unquoted public companies primarily in Nigeria but with a focus on the West African region.

The first quarter report of the securities exchange showed that volume and value traded rose by 13 per cent and 52 per cent respectively with the

market registering an average deal volume and value of 214 units and N1.50 million respectively in Q1, 2016.

Transactions in the market was led by Industrial and General Insurance, IGI, Plc and FrieslandCampina WAMCO Nigeria Plc which accounted for 29.42 per cent and 48.93n per cent respectively of the value traded during the quarter.

The market recorded a positive quarterly return on the index as reflected in the upward movement of the Unlisted Securities Index (USI-Market Cap). The USI closed at 592.06 points as against 582.79 points in the previous quarter representing an increase of 1.59 per cent,

while the market capitalisation of admitted securities on NASD OTC market at the end of Q1 2016 stood at N389.85billion. .

The market also experienced growth in the number of authorised traders as five new authorised traders were inducted during the quarter bringing the total number of authorised traders registered by their sponsoring firms to 193.

At the end of the quarter, NASD OTC market had opened up 26 securities to trade as against 24 securities in the previous quarter.

Meanwhile, a turnover of 885.367 million shares worth N5.829 billion in 13,870 deals were traded by investors on

the floor of the Nigerian Stock Exchange, NSE, last week.

The financial services industry (measured by volume) led the activity chart with 747.817 million shares valued at N3.832 billion traded in 8,768 deals; thus contributing 84.46 per cent and 65.73 per cent to the total equity turnover volume and value respectively.

The consumer goods industry followed with 45.517 million shares worth N977.579 million in 2,145 deals. The third place was occupied by the agriculture sector with a turnover of 32.313 million shares worth N48.460 million in 247 deals.

Vanguard, MONDAY, APRIL 25, 2016 — 25

Homes & Housing Finance

CDK to open ceramic tiles, sanitary wares factory

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High-end housing development

Real estate: ‘Why rents remain high despite supply glut’ Stories by YINKA KOLAWOLE

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report by the Financial Derivatives Company Limited (FDC) has highlighted reasons why rents in real estate in some parts of Lagos remain high despite a glut in property supply. The report covered Ikoyi, Victoria Island and Lekki neighbourhoods.

According to the FDC report, “persistent macroeconomic headwinds in recent times have led to lower demand for prime properties in Lagos.

Stock broking firms, investment banks, insurance companies, airlines and oil companies that usually rent these properties for office space or residential use are experiencing a business downturn.”

The report also noted that there is a strong correlation between real estate and investment, money laundering and public sector corruption. Explaining how anti money laundering activity affects the real estate market, the report stated that many of the suspects are returning properties to government; EFCC confiscating properties and; many properties are tagged as under investigation.

“Empirical evidence reveals that approximately 90 percent of Nigerian investors hold real estate as an asset class in their portfolios. The sector has become enigmatic because of the strong correlation between the investment, money laundering and public sector corruption. This is why rents remain stubbornly high even when there is a supply glut.”

In the pioneer edition of its real estate vacancy factor index (VFIX) for the Lagos

metropolis, using January 2015 as the base month for index, FDC noted that the number of properties that were vacant in March 2016 was 65 percent higher than in the base month in January 2015.

The vacant properties were higher in Lekki (64 percent) followed by Victoria Island (35 percent) and Ikoyi (24 percent). The report added that Admiralty Way in Lekki has the highest vacancy ratio due to challenges that businesses face in the current macroeconomic environment, noting that most properties on the street are offices and commercial spaces.

Inflation The jump in the inflation rate from 8.2 percent in January

2015 to 9.6 percent in December 2015 has reduced the purchasing power of individuals within the economy. As a result, the value of individual incomes has declined both in nominal and real terms. Given that this

The sector has become enigmatic because of the strong correlation between investment, money laundering and public sector corruption

research focuses on luxury areas, a decline in income is expected to reduce the demand for housing.

Following, the real estate industry is used as a hedge against inflation. This is because real estate assets are long-lived assets that adjust to inflation, which explains the increased supply of housing.

Specifically, inflation increases the value of the housing property, which provides incentives for new initiatives in the real estate market.

The official exchange rate rigidity in the face of imminent devaluation is discouraging investors from taking final investments decisions. Thus in aggregate, is reducing the demand for both residential and commercial properties.

The potential investments will naturally lead to demand for office space and commercial properties.

Arbitrary estate valuation worsens housing crisis —FASHOLA A

rbitrary estate valuation, high agency fee and high cost of rent have contributed to the inability of most Nigerians to have access to affordable housing.

Minister of Power, Works and Housing, Mr. Babatunde Fashola, made this assertion at the recently concluded 46th Annual conference of the Nigerian Institute of Estate Surveyors and Valuers (NIESV).

Fashola, who was represented by his Special Adviser on Lands and Housing, Mr Abiodun Oki, challenged surveyors on the need for change of estate valuation in conformity with the principles of real estate pricing. He said high fees charged by surveyors are impeding access to affordable housing. According to him, 5000 properties in Lagos were not rented due to overpricing and high agency fee. “Fifty, forty-one and thirty-three 33 percent of people in Lagos, Kano and Abuja, respectively, rely on estate agents when looking for a house but agents make housing more difficult compared to the landlords,” he stated.

The minister noted that the role of NIESV in making housing affordable to Nigerians cannot be over-emphasised, even as the three tiers of government are expected to facilitate the development of housing.

He asserted that the housing needs of Nigerians cannot be met by government alone, adding however, that even where available everyone cannot afford a house.

“Sixty-four per cent of the United States population are house owners while 34 per cent are living on rented apartment despite their housing programme,” he declared.

In his remarks at the conference, President of NIESV, Olorogun James Omeru, enjoined surveyors as foremost professionals in the built environment to guide the country towards sustainable city development. He stressed that surveyors could help redress infractions in city development across the country if there is a conducive environment for them to operate.

DK Integrated Industries is set to commence the production of porcelain and ceramic tiles as well as sanitary wares as it opens its factory in Shagamu, Ogun State, in May 2016.

Chief Executive Officer of the company, Dr Khater Massaad, said that the ultra modern factory, built on a million square meters of land, is targeted at meeting demand for ceramics and sanitary wares, particularly in Africa and Europe.

He asserted that with CDK Integrated Industries Nigeria will become a major exporter of ceramic tiles and sanitary wares to other African countries and Europe in the nearest future. He noted that over sixty five million square meters of ceramic tiles are imported into Nigeria as published by Italy-based Ceramic World review magazine. “Our aim is to produce high quality ceramic tiles and sanitary wares products; everyone is in need of high quality products. We aim to meet the best quality in the world matching and possibly surpassing the American and European standards. CDK Integrated Industries’ vision is to be number one in Africa in terms of product quality and pricing,” he added.

US home sales soar 5.1% in March

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ales of existing home in the US rebounded strongly in March, signalling sturdy demand in the housing market even as the recovery remains choppy.

Sales rose 5.1 percent to a 5.33 million seasonally adjusted annual rate, the National Association of Realtors said last week. That was higher than the 5.3 million rate forecast by economists surveyed by MarketWatch.

That pace was up only 1.5 percent compared to a year ago, but the average for the first three months of the year, which NAR Chief Economist Lawrence Yun called “bouncy,” was 4.8 percent higher compared to the same period in 2015.

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26 — Vanguard, MONDAY, APRIL 25, 2016

Insurance

Fashion industry must achieve scale to attract investment – Uduanu

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n a deliberate bid to capture the interest of fashion and design industry operators and boost activities in the proposed micro pension scheme targeted at informal sector operators, Pal Pensions, one of the licensed Pension Fund Administrators (PFA) sponsored this year ’s edition of the Lagos Fashion and Design Week.

Speaking at the event, Managing Director/ Chief Executive officer of Pal Pensions, Mr Dave Uduanu, said for the fashion industry to attract investments, the operators must have to demonstrate their ability to achieve scale.

He said the fashion industry, has incredible potential to scale but however said it was being held back by a number of issues.

He cited example of potentials in the industry saying the second richest man in the world, Zara founder, Amancio Ortega made his money through the fashion industry. “What it tells me is that if you really want to make money from fashion, you need to achieve scale.

“There is $25 billion investment opportunity in the industry and this money is looking for investment outlets. These investment outlets are outlets that would generate returns that would ensure that the pensioners get their monies when they retire,” he stated The pal Pension boss told the designers that it is important they have a business plan that they can pitch to investors.

“For your business to succeed, you need to put all your energy into that business because investors prefer to back an entrepreneur who is willing to put all he has into his business.

He also counselled them to always create an exit strategy when doing their long term plans in order to attract investors.

According to him, “Investors need to see an exit because most investors are not looking to remain with you for 20 years. You can’t build a business with the view that you must leave that business to your children, you must build a business with the view that you can exit at some point.

PRESENTATION - From left: Mr. Bala Bantex, Deputy Governor of Kaduna State; Mr. Henry Ationu, Executive Director, Business Development, UBA Metropolitan Life Insurance Ltd; Mallam Nasir El Rufai, Kaduna State Governor; Mr. Adetunji Mustapha, Regional Business Head (Abuja & North) of UBA Metropolitan Life; Mrs. Hadiza Bala Usman, Chief of Staff to Kaduna State Governor; at the presentation of about N30 million benefit cheques to the 24 deceased beneficiaries of last year’s Zaria bomb blast.

Why NHIS should be monitored by investigative auditors

BY ISRAEL OBIORA MBACHU

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any African countries

have established the national health insurance program. Nigeria’s National Health Insurance Scheme (NHIS) came on stream in 1999. Ghana’s NHIS was established in 2003. Kenya’s National Hospital Insurance Fund (NHIF) has been long operational, since 1966.

The establishment of the national health insurance scheme came about by the desire of the national governments to better serve the health needs of the population. It was hitherto the situation that the citizens have to go before the physician when their condition had become worse because medical costs were not easily affordable. The scheme made it possible for the insured to seek immediate care whenever there is imminent need to see a physician.

However, as in all human endeavours, a miniscule percentage of the participants, particularly physician providers, have resorted to milking the system for pecuniary gains and greed. Every health care or insurance program has been subject to criminal gaming and gaining off the system by physician providers who perpetrate fraud.

Fraud diminishes the objectives of the program, indeed of any human endeavour. If fraud is allowed to fester and not checked, the program will ultimately shut down.

The West, particularly Europe and America, have established fraud task forces

either solely by the private sector or by their respective governments in collaboration with the private sector. In the United States, there is the Department of Health and Human Services, which established the Medicare Fraud Strike Force and the Medicaid Fraud Control Units. There are also the Health Care Fraud Unit of the Federal Bureau of Investigation (FBI)and the Centers of Medicare and Medicaid Services (CMS). All the government’s efforts are coordinated under the Department of Justice (DOJ).

There are private organisations such as the Coalition against Insurance Fraud and the National Health Care Anti-Fraud association (NHCAA). These organisations strive to combat health care fraud and safeguard the US annual

The HMO Investigative Auditor will be able to investigate and audit both local HMO claims as well as foreign claims

health care expenditure of over US$3 trillion. In spite of their efforts, however, they acknowledge that about 5% of the annual expenses is lost to fraud. The FBI estimates that over US$250 billion was lost to fraud in 2014. The efforts of the US Department of Justice (DOJ) in investigating health care fraud have however resulted in recoveries of the sum of US$5.7 billion in 2014 and US$3.3 billion in 2015. From 1997 to 2015, it has recovered the sum of US$27.8 billion.

The Canadian Health Care Anti-Fraud Association (CHCAA) reports that out of C$120 billion spent by Canada annually on health care, fraud loss is over C$12 billion per year.

European countries have not fared any better in effectively checking fraud in their respective health care programs. The 2020 Health in the United Kingdom estimates that the true cost of fraud in the UK’s National Health Services (NHS) is over £3 billion per year.

It has been recognised that the various ways the physicians bill the programs include billing for services not rendered, unnecessary tests in order to collect insurance payments and use of another’s insurance card.

African countries’ experience including Nigeria’s with respect to fraud cannot be different from the experience of the West.

While discussing this topic with some people in Nigeria, one of the interviewees, an employee of a multi-national corporation, covered under the NHIS informed me that his wife took ill at a time and went to the hospital. She was billed ¦ 61,000.00. However, her cover under the scheme was limited to ¦ 50,000.00 per

outpatient visit, which meant that she has to pay ¦ 11,000.00 from her pocket. He had reached into his trouser pocket to retrieve his wallet when one of the physicians advised him that nobody pays cash from their pocket. He was told to present his insurance card and they will apply it to his wife! That is fraud and an indication it thrives in the system.

“The challenge in the use of recent medical graduates as fraud Investigators is that although they may be versed in medical practice, they lack fraud knowledge and training.”

Another indication that led me to the suspicion that fraud exists within the NHIS in Nigeria, is that over 60% of health insurance fraud perpetrated in Nigeria against foreign public and private insurers involves physicians colluding with the subscribers/policyholders.

More than 60% of these physicians are enrolled in the NHIS network as expressed in their letterhead. If they are billing or attempting to defraud overseas companies, then the local programs cannot be different.

If fraud is occurring under Nigeria’s NHIS so it is in most African countries health care schemes. Kenya recognizes this fact in their National Hospital Insurance Fund (NHIF). As a result, it encourages whistleblowers to report fraud and has a hotline or tip line on their web site.

For Nigeria, I’m aware that although they have not instituted an Internet hotline, but the HMOs deploy young physicians as Investigators to investigate suspicious claims.

In order to solve these challenges, not only in Nigeria but around the world, I have developed a program to train HMO Investigative Auditors. This will be the first of such a program anywhere in the world.

The HMO Investigative Auditor will be able to investigate and audit both local HMO claims as well as foreign claims. Investigation entails that the trained professional can effectively undertake the investigation of one or more suspicious claim in order to determine the facts about it. Auditing requires that occasionally, claims from every primary, secondary and tertiary-level hospital in the network should be audited to determine if fraud is being perpetrated and, if so, to what extent.

Additionally, the HMO Investigative Auditor can effectively investigate foreign health claims including travel insurance (medical expenses) claims and report factually to the principals.

“The Nigerian HMO Investigative Auditor will be able to effectively investigate local and foreign HMO claims. He may choose to work only cases in Nigeria or within ECOWAS or even around the world.”

Vanguard, MONDAY, APRIL 25, 2016 — 27

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“

uhari came into office with an agenda for change. This was a compelling and ultimately victorious slogan….” Vice President Yemi Osinbajo, at the NATION’s Forum on the Economy, Thursday, 8 April 2016.

Sweltering afternoons, usually spent engaging in vicious fights at filling stations for fuel, followed by dark and cheerless nights on account of continuous power failures, businesses paralysed in the absence of raw materials and the same power supply and roads closed by vehicles waiting for days (not hours anymore) for fuel which never seems to arrive, transport fares long gone through the roof and general despair that the situation will be better soon.

One might as well add unpaid salaries to millions of workers in the public and private sectors.

These are the realities of our lives these days. Were these part of the change agenda? Were these the promises made to Nigerians during the campaigns? Probably not, at least, I never heard anybody in the APC campaign trail saying things were going to get so bad for us.

So the Vice President of Nigeria was right; CHANGE was a slogan devoid of content during the last elections. I should know because of my experience with Buhari’s campaign in 2011 when he had first adopted the change mantra.

Prince Tony Momoh, former Federal Minister for Information was the Chairman for Congress for Progressive Change, CPC, on whose platform Buhari ran that year.

Some of those with who Buhari entered into an alliance had their own candidates. The Action Congress of Nigeria, ACN, fielded Malam Nuhu Ribadu – who they later

APC Change Programme: The slogan and the reality betrayed and voted for Jonathan on Election Day. So, we all know who to blame for four years of Jonathan.

However, this column is not designed to re-open the books on 2011. Its purpose is to examine how the concept of “change” which started with the Buhari campaign in 2011, and which had a specific content, had transformed into a mere slogan in 2014 to 2016 and how the APC is now just struggling to give it a content. The NATION’s Forum on the Economy, coming only about two weeks after the National Economic Council, NEC, held a retreat to craft an economic programme for the Federal Government is instructive in two ways.

First, it implies that the newspaper — its proprietor, directors and editors – strongly believe there is a vacuum in economic policy and programme which needs to be filled. They are absolutely right. No honest economist can fail to notice the absence of both policy and

credible programmes at the moment. Second, the Forum itself is coming too late and might not be too useful. In reality, given the fact that the paper had supported the APC and its candidate, the time to organize the Forum on Economy should have been last year – before Buhari assumed office.

Permit a quick diversion before an explanation is given regarding the timing of the NATION’s forum.

In 2011, I had approached Tony Momoh, who was with us in VANGUARD before becoming the Chairman of CPC to offer my services, free of charge, to assist Buhari in crafting his Economic Change

So the Vice President of Nigeria was right; CHANGE was a slogan devoid of content during the last elections

Programme. The reason was simple. A political party, out of government, campaigning on the platform of “change”, must, as a minimum, address several questions: what is to be changed and why? How will it be changed and why? When the changes will occur? Who will undertake the change process? How much will it cost? What will be the benefits to the people of Nigeria?

I went to Abuja at my own expense and Momoh introduced me to some of Buhari’s senior campaign staff.

Within two weeks, a draft outline of CPC’s Content of Change was ready – to be discussed and fleshed out later. Seven areas were identified and the most upto-date information about the situation of each of them was obtained. These were going to be focus of change. Selection of seven thrusts was deliberate.

After over twenty years of running commentaries on Federal Budgets, it had become clear that we were making no progress on

anything because governments were trying to do too many things in a short time.

Prioritisation was key to success – do a few things and do them well.

The draft was presented to Buhari’s people shortly after and two decisions were made.

First, the details needed to be worked out – including the implementation process.

Second, an appointment would be made to brief Buhari after the work had become more advanced. Unfortunately, there was a major constraint – the Buhari campaign organization was short of funds. My trips to Abuja were self-funded and there was no money to recruit the additional staff required to provide the details until the end. But, there was a content to Buhari’s change message in 2011.

About a month after Buhari had been nominated by the APC as the flag bearer of the party, I noticed that “change” had again become the slogan.

Investigations quickly confirmed my worst fear; the slogan had no meaning because it was devoid of specifics. Again, at my own expense, I traveled to Abuja for an appointment with one of Buhari’s in-laws.

Microfinance Microcred MFB diversifies into micro insurance services STORIES BY PROVIDENCE OBUH

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icrocred MicroFinance Bank (MFB) has diversified into microinsurance services with a view to generating about N40 billion from the Lagos market in the next four years.

The diversification which is coming barely three months after the Kaduna-based outfit secured a licence from the CBN to offer its services nationwide, sets the company on course to grabbing up to 300,000 insurance customers in Lagos.

CEO, Microcred MfB, Mr Kazeem Olarenwaju, said that the diversification would sustain the company’s growth and leadership position, disclosing that the bank entered into partnership with AXA Mansard, a member of the global AXA Group, to give clients multi-faceted insurance services.

He said, “Through a partnership arrangement with AXA Mansard, Microcred Nigeria will provide its clients multi-faceted insurance services, covering life and non-life insurance. Losses associated with death, burglary, fire and special perils should now become a thing of C M Y K

the past.

“Never shall our clients lose their business to any disaster, clients would be educated and supported to ensure that their assets are insured at an affordable rate.”

Also speaking, Deputy CEO, Ms. Isabelle Levard, said that the outfit would exploit the huge business potential in Lagos to

consolidate its leadership position, pledging a new experience for its Lagos clients.

“We want to ensure that clients are protected and will not lose their goods to any insurable risk. We plan to enlist over 300,000 customers in Lagos and its surroundings within the next four years and we are targeting over N40

billion from various insurance products,” Levard said.

The Divisional Director, Retail Solutions of AXA Mansard, Mr Yomi Onifade, described the Nigerian insurance industry as largely under-penetrated, stating, “as a leading non-banking financial service group, we are poised to offer

unparalleled products and services to Microcred’s clients by ensuring that their risks are adequately covered.

“The targeted clients have every reason to be excited and happy as their losses would be minimised going forward.

We are excited to partner with Microcred to achieve its growth aspirations in Nigeria while also growing insurance penetration,” he said.

Good corporate governance will change Nigeria — Adeluyi ...as ICAN confers fellowship award on 969 members

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he Former Minister of Health and Chairman of Juli pharmacy, Prince Julius Adelusi-Adeluyi, has said that the adoption of good corporate governance will change Nigeria.

He stated this during the conferment of Fellowship Awards on 969 members of Institute of Chartered Accountants of Nigeria (ICAN) in Lagos.

Meanwhile, earlier in an address, ICAN President, Otunba Femi Deru, urged the new Fellows to inculcate honesty in the discharge of their duties so as to contribute to the development of the economy, saying, “The nation is waiting for us as chartered accountants to make things work.”

According to Adeluyi, “As

professionals especially as accountants who are accountable, we must look through life and leave that life whereby people will know that we are disciplined, ethical and that we can be believed as truth speakers

who are ready to build goodwill and that our work is going to be beneficial to our clients and all concerned.

“I am sure that if we do this it will help the body out there, the business people both public and private to

carry out good corporate governance. If we have good corporate governance Nigeria will change.

If the professional groups can change their mind and say we want to have professional ethics, the country will change.”

SON boss tasks States on MSMEs

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cting Director General of the Standards Organisation of Nigeria (SON), Dr. Paul Angya has appealed to State and Local Governments to assist Micro, Small and Medium Scale Enterprises (MSMEs) stand on their feet for overall economic and industrial growth.

He said this at a courtesy visit to Governor of Enugu State, Ifeanyi Ugwuanyi, stating that MSMEs are the engine of growth for any economy.

To this end he said, “Concerted efforts should be made by government at all levels to grow

the sector.

“There is no way we can diversify the economy without the active development and involvement of the MSMEs. They are the secret of economic prosperity. Let the state governments in Nigeria help MSMEs in their localities to survive, then SON as the regulator would come in, accredit and certify them. “We have been encouraging and supporting them through trainings and sensitization programmes. We have offered in some states and offering 25 percent subsidy for their certifications.

28 — Vanguard, MONDAY, APRIL 25, 2016

E-Commerce STORIES BY JONAH NWOKPOKU

Digital Base, iFLUX open retail shop for LED lighting products

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FLUX brand in partnership with Digital Base Limited have last week opened its second brand experience and retail centrer in Lagos with an array of eccentric, top-ofthe-range LED lighting products.

Speaking at the Victoria Island showroom opening , Teddy Lee, Managing Director of iFLUX said that the multinational company is the first of such brands playing in the LED lighting sector to cover a two years warranty on all their LED products.

“We have proven to the market the high quality and our commitment to quality assurance. For instance, the eighty eight (88) solarpowered streetlights installations in Ikeja computer village of ‘Light up Ikeja’ Community Social Responsibility project by Tecno Telecoms limited are iFLUX products “As we speak, those LED streetlights are fully functional; there are no glitches and each one of them has a warranty of two years, within this period, the product will be responsible for fixing or replacing any of the streetlights that show factory faults,” Lee explained.

Speaking on the long life span of the products, the Managing Director, iFLUX LED Nigeria, Victor Okpaluku said on a three hours daily use, the life span of one iFLUX LED light bulb is equivalent to the combined life spans of twenty incandescent bulbs. “iFLUX products saves up 80% of the energy used to power incandescent lights, the power wattage required to light up the product to full glow can be as low as 8W,” Victor, the brand marketing lead reiterates.

“The two years warranty on products redeemable on all CarlcareTM centres nationwide,” Terry Tang, Marketing supervisor, of the company, added.

Also speaking, the Head of Marketing, Digital Base Limited, authorised dealer of iFLUX, Abel Emokai said that the product has the state-of-art technology to support the Nigeria market.

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he number of retail ecommerce transactions taking place through smartphones in Nigeria spiked by 73 per cent within the first quarter of 2016.

This is according to ecommerce Q1 report data by performance marketing firm, Criteo which was presented by the Managing Director, Emerging Markets, Dirk Henke while making a presentation at the Mobile West Africa conference held in Lagos last week. This is a reflection of global mobile commerce trend which has risen by 39 per cent since the last quarter of 2015.

The report which shows smartphones becoming the dominant m-commerce device indicates smartphones taking a huge chunk, about 18 per cent in Africa, of ecommerce transactions compared to about 10 per cent share of other mobile devices.

The report also highlights mobile versus desktop sales trends in the country with desktop sales dominating ecommerce transactions within weekdays and Saturdays while Sundays share equal transactions rates between mobile and desktops. This is in contrast to South Africa’s mobile commerce trends where mobile dominates all weekend transactions.

The report also noted that on weekdays, desktop usages specifically spikes during office hours with clicks averaging 1200 per

CONFERENCE: From left, Dirk Henke, Managing Director, Emerging Markets, Criteo; Sebastian Loaiza, Country Manager, Sub-Saharan Africa, Criteo; Shayan Rahimi, Business Development Manager, Middle-East & Africa, Criteo and Michele Lozzo, Commercial Director, MEA, Criteo at the Mobile West Africa Conference in Lagos. Photo:Lamidi Bamidele

73% e-commerce transactions in Nigeria happened on smartphones in Q1 cent and clicks through mobile barely rising above 100 per cent. However, on weekends, desktops and mobile usage are similar with clicks averaging 250 per cent across the devices.

Another important highlight of the survey is the inability of payday weeks to influence e-commerce sales.

Except for significant sales rise during the Black Friday sales in Q4, 2015 which coincided with the paydays, transactions within the other

paydays and within the first quarter of 2016 remained basically flat. However, Henke noted in his presentation that despite the impressive statistics and growth trends, everything is not perfect yet, because while 86 per cent of retailers claim they already have a mobile optimised website, only 13 per cent of consumers rate their shopping experience as ‘very good’ on smartphones.

The report, however, shows Nigeria's mobile conversion

rates steadily growing with Android smartphone averaging 1.8 per cent conversion rates, iPhone and iPad, 2.9 per cent and Android Tablet, at 1.5 per cent conversion rates.

Henke noted retailers need to become more strategic in their approach to sales by personalising their marketing across different channels and adopting retargeting strategies to convert more visitors into real buyers.

Rosabon marks 23rd anniversary, empowers women with grants

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s part of programmes to mark its 23 rd a n n i v e r s a ry, nonbanking finance institution, Rosabon Financial Services has entered into a strategic partnership with a non government organisation, NGO Mamamoni, to empower 23 women with soft grants and capacity building.

In a statement, Rosabon said, this is part of its efforts at encouraging women empowerment and promoting indigenous production, adding that the training and provision of grant to the selected women is part of Rosabon’s commitment at supporting local business to boost local production and grow the economy.

The women who are involved in various crafts including farming, fashion designing, soap making, fish farming and other chemical productions got the grant to further expand their businesses.

At the cheque presentation at Satellite Town, Lagos last

week, the 23 women expressed gratitude and satisfaction for the support received from Rosabon.

Speaking on the empowerment initiative and partnership with Mamamoni, Rosabon’s CEO, Chukwuma Ochonogor said they were inspired by Rosabon’s passion for deepening access to financial services, especially as a means to

tackling the menace of poverty among the unbanked.

He noted that the company has championed financial inclusion in Nigeria through its several innovative products targeted at the nonbanking population, adding that the partnership with Mamamoni is to continue its drive at deepening financial inclusion in the country.

According to Ochongor, “Women are becoming great players in the economy, so it is very important that they get the right empowerment.

At Rosabon, we have a societal outlook and recognize the importance of working together for the greater good. We are fully committed to this project and will keep it on for as long as possible.”

Shoptomydoor unveils 3-day delivery from US to Nigeria

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nternational online shop, Shoptomydoor.com has announced a three day delivery service from the United States of America to Nigeria and other African countries In a statement, the company said the introduction of the three days delivery at a discounted rate from USA to any country in Africa is in the spirit of its commitment to constantly give value to customers.

“The company’s goal is to continue providing Africans stress free global shopping and shipping experience that brings an affordable solution to their need for quality products ranging from clothes, shoes, auto parts, cars and electronics through an innovative platform. Although, ecommercehas continued to grow in Africa, there is still room for improvement. E-commerce is not

just about setting up computers and businesses, but encompasses a larger scope,” said Nduka Udeh, President/CEO of Shoptomydoor.com.

He said: “Most of what is needed to grow e-commerce is to put in place the right strategies and ensure strict implementation, provide an enticing browsing experience across online platforms, create multi-channel offerings that will enable consumers experience your brand consistently, consider consumers shopping method of choice and invest in mobile. Mobile commerce is growing at a rate of over 130 per cent annually. To stay competitive, we offer mobile-accessible services such as tracking, delivery status and real-time notifications.

Vanguard, MONDAY, APRIL 25, 2016 — 29

People in Business People gain wealth by investing, not by hoarding — Engr. Samuel Egube

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ngr. Samuel Egube is the Chairman, AltAssist Limited, a Lagos-based Management Consulting firm. In this chat with Financial Vanguard, the engineer, banker and business consultant speaks on sundry issues, harping on the need to unlock/create value through networking and building business relationships.

Excerpts:

By EBELE ORAKPO

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ackground: Upon graduation from University of Benin, armed with a degree in Civil & Structural Engineering, Engr.

Egube was sent to the National Defence Academy, Kaduna for his one year national youth service. After that, he worked briefly with his elder brother in his furniture component export business.

“After working with him for a short period, I felt I should some more exposure in business and enterprise so I joined Arthur Anderson (now KPMG Professionals). From Arthur Anderson, I went into construction again because business was always on my mind. Although I read engineering, I have an MBA and I am a member of different societies – Nigerian Society of Engineers, Council for the Regulation of Engineering in Nigeria, Fellow of the Institute of Credit Management, Honorary Senior member of the Chartered Institute of Bankers and an Associate of Nigerian Institute of Management. I also attended several courses.

Working in the banking industry: “I went into construction with some of my friends and worked there for about two years before going into the banking industry. The exposure I had at Arthur Anderson formed the bedrock of my work ethics and culture. In Arthur Anderson, I learnt about how to analyse business and the frameworks by which some of these analyses are done quite easily. And then the work culture was extremely strong.

I went into banking because while I was in Arthur Anderson, I consulted for the financial services industry and so I had very heavy interactions with most of the leading banks at that time, doing one form of assignment or the other. I passed through several leading banks from UBA, NIB International Bank, First Bank and Diamond Bank, taking up different roles and responsibilities (administrative to business development).

I spent quite a bit of time driving energy so I am known C M Y K

basically as oil & gas man even though I have had significant exposure across the various segments of the economy basically.

What I do: Today, I do a lot of consulting work, what I call Pair of h a n d s consulting. I interact with a lot of people who require capacity in their business from the advisory stand and then you flow in to give them that support. Many businesses are led by CEOs who require an equivalent capacity in business and who probably are unable to afford that on permanent basis so basically, we give that level of support from time to time. I am also a director in several companies and serve on their boards, helping to provide the required directions to keep them focused, and the governance system and framework working.

Networking: I have a passion for Nigeria.

I believe Nigeria is a great place but our forebears had not done a great work in building great enterprises. It is quite a challenge seeing the very few enterprises that had moved from one generation to another.

It is the African/Nigerian mindset. Typically, we have not learnt how to work together.

Most people are sole proprietors, they run their businesses alone. I am glad the consolidation in the banking industry forced a lot of people in the sector to work together with other stakeholders and the industry is better for it.

It is coming from very strong regulations and rules around the practice of banking in Nigeria and the fact that there are a lot of extremely strong stakeholders in the sector. It is my belief that we will see more of that happening where resources can be pulled together to make things happen.

Historically, if your money is unable to do it and you are unable to get banks to do it, you just leave the enterprise or the idea. But today, people come together to build skyscrapers

•Engr. Samuel Egube where each of them will own just a part. This gives me the hope that the future of Nigeria is great. The Oil & Gas sector has done well too. When some major international oil companies began to divest, it became clear that as Nigerians, we were going to participate and we needed to do so together. There would be more of that going on as we pull our capital together to create things.

One job which I love and which I do now is pulling people together and causing them to make investments that are good for Nigeria. Except we learn how to do that, we will not make significant progress.

Trust: As human beings, it has always been a matter of trust.

There is a reason why we need visas to go into other countries.

Depending on the level of trust, things can work smoother but you cannot wait for trust to enter a perfect state before you can do business; that is why you have laws. There are rules of engagement and if you want to approach life purely based on trust, then you will not have

Corruption begins in the mind, with the way we interpret things; if you believe you are going to gain wealth only by receiving, it is a corrupt thinking

institutions.

In the Banking industry, you build rules and controls; you anticipate what can go wrong and then you build reasonable controls around them. You have systems that check those events from time to time to ensure they are not in breach.

There are outcomes and repercussions when those systems are in breach. “Can I trust you? I don’t know. You may be a great person today but I am not sure how you will be if we start to make money or how you will behave if you start to have family problems, whether the problems will come into the business. So it is always going to be about the rule of law and principles.

Today, the biggest corporations in the world are public companies and they are controlled companies because the stakeholders are the public.

The securities and exchange commissions around the world put rules to guide the behaviours of these companies.

Rules actually hedge us in to a predetermined behavioural expectation.

Challenges: One is Rule of law: I am looking at the entire systems that help support agreements in Nigeria - constitution, specific rules around businesses and the rules with which we operate. So if the rule of law is working properly, then it is clear what to expect when we agree to do business. Corruption: Another problem is the way people think which I call corruption. Corruption is not what you see in the streets when the roads are decaying or things like that.

Corruption begins in the mind, with the way we

interpret things. If for example you believe you are going to gain wealth only by receiving, it is a corrupt thinking. People gain wealth by investing, not by hoarding. So when you have people putting money in soakaways, it is a decaying mindset, and those people are the ones you put in charge of our infrastructure and business systems. And because that is their mindset, the outcome of their work is decay.

People think also that scattering, rather than integrating people is a great way to provide leadership so rather than reintegrating our people, we put them in silos – north and south; Christian/ Moslem and not just Nigerians. That creates a political ecosystem that leads to another level of distrust. I have to surmount the fact that you are a northerner and I am a southerner so we always try to second-guess what other people’s intentions are. This creates an unhealthy atmosphere for interaction and business actually thrives with increased interactions among people.

Infrastructure: The two major ones are power and logistics.

If power is steady, small enterprises and manufacturing companies can run at lower costs. Thankfully, Nigerians are creating alternative solutions.

Functioning rail system: People and goods must move freely and cheaply. If I can move from Benin to Lagos in two hours by rail, I don’t need to live in Lagos to work in Lagos. If I knew that quite cheaply I could move my goods from Apapa Port by rail to Port Harcourt, then I can build a factory in Port Harcourt and have a very decentralised economy and a better distribution of our people which will aid significant amount of interaction. I can wake up this evening and say I am going to Abuja for a meeting and from there, I just want to touch base in Kaduna and each of the trips takes about three hours or even 30 minutes. That helps because when people interact with people, business happens.

I understand that over 50% of our tomatoes go to waste.

Can you imagine if that 50% can come to the market, what the standard of living of our brothers who produce tomatoes in the north will look like?

In my own business, because it is a business that affects capital and people, you find out that the challenges facing the economy become my challenges and my job is to try and create solutions around these challenges to make thing better despite the situation.

30 — Vanguard, MONDAY, APRIL 25, 2016

Economy

First half economic outlook appears hazy despite oil price rebound —ANALYSTS

BY EMEKA ANAETO, ECONOMY EDITOR

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midst dramatic positive turn in oil prices in the international market some economy analysts have indicated that a positive ruboff on Nigerian economy would not come in the short term.

Economists at the Financial Derivatives Company Limited, said the inflationary pressures which had sustained over thirteen months consecutively, would remain in the months ahead, due to the persistent scarcity of petroleum products, among other key factors.

However they noted that the currency swap initiative between Nigeria and China is expected to dampen domestic prices, as China accounts for 25.6 per cent of Nigeria’s import, hence a moderating influence on imported inflation, especially as China’s inflation remained flat at 2.3 per cent in March, 2016.

But economy researchers at ARM Investments said their earlier identified tripod of inflation drivers coming into 2016 (higher electricity tariff, Naira volatility and petroleum products scarcity) dominated inflation discuss thus far in 2016, adding that lingering fuel scarcity bolsters their expectation for continued pressures on prices within the second quarter.

Consequently, they projected a 57 basis points rise in headline inflation to 13.4 per cent for April 2016 with a target full year 2016 average now at 12.79 per cent. Last month’s headline inflation rate was 12.8 per cent, a near 4-year high.

In its economic outlook for first half 2016, the economists

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at ARM Investments stated that output will also remain depressed as growth challenges show no sign of abating “Going forward, we retain bearish outlook on overall gross domestic products, GDP, on the back of extended delays in the passage of 2016 budget which was meant to signpost a kick-start of stimulatory fiscal spending that would have supported production in non-oil segments of the economy.

Consequently, we retain our 2016 GDP forecast of 2.9 per cent year-on-year.”.

Further, they stated, “whilst we expect currency issues to keep importation reasonably constrained, oil exports is likely to be pegged-back by incessant downtime at strategic pipelines such as Trans Forcados, with organisations such as Seplat Petroleum, already bracing up for significant down-time over the first half of the year”.

This, according to them, increases prospects for renewed balance of payment pressures over the rest of 2016.

As a result, they said that the huge parallel market premium in the foreign exchange market which resulted from the decision of the Central Bank of Nigeria, CBN, to administratively peg exchange rate in its officially controlled market segment in the face of sharp depreciation in the parallel market, would persist.

“In all, as the CBN keeps its grip of the peg, we expect further market dislocation to result in sustained increase in parallel market premium”.

On the stock market ARM analysts said, “over the rest of first half 2016, whilst oil prices show signs of finding a bottom, current foreign

Sen. Udo Udoma, Minister of National Planning exchange market illiquidity should continue to stymie foreign interest on the domestic bourse”.

Thus, they advised that domestic investor considerations should play a pivotal role in charting equity market outlook in the second quarter (Q2), 2016.

However, on this wise, they reasoned that the recent twist in monetary policy and resultant rise in interest rates raises the hurdles for quoted companies while driving heightened domestic investor sensitivity to stock fundamentals.

On balance, they see lagged

economic policy response to the tepid economic landscape as driving a bearish market outlook in the Q2, 2016.

“Our base case was for a weak macroeconomic landscape on account of the oil price shocks to combine with current foreign exchange restrictions to temper foreign participation in Nigerian equities, leaving domestic considerations to exert greater influence on market outlook.

“On a sector basis, we anticipated the planned fiscal stimulus would be positive for FMCGs (fast moving consumer goods companies) and cement stocks with the latter aided by modest valuation multiples.

“Going forward, whilst oil prices have posted a quicker recovery than we expected, subsisting glut and still unclear prospects for an output freeze leave room for further price volatility in Q2, 2016.

“Combined with current foreign exchange restrictions, we see an extension of net

GTB boss advises entrepreneurs on exchange rate

BY ESTHER ONYEGBULA

I

n the face of worsening foreign exchange supply crises, young entrepreneurs have been urged not to allow exchange rate to determine their success.

Speaking at the 2016 edition of Business Wednesday, an interactive platform that facilitates networking, information sharing, and bonding hosted by the Market Place Alliance of this Present House, Managing Director, Guaranty Trust Bank Plc, Mr Segun Agbaje, who made this admonition, shared useful insights on successfully running a business and ultimately creating lasting value in present-day Nigeria.

To buttress his point Agbaje gave a brief recap of similar

challenges in his career trajectory in GTBank, and later delved into the socio-economic dynamics of the country since 1991 when he joined the bank.

“I still believe Nigeria is the greatest place on earth to do business. Africa as a continent is the best place to do business. There are a few countries with the population we have and at the least, 50 per cent are below 28. Who else has 170 million people to sell products to?” Agbaje said.

“When the rate was N22 to $1, you didn’t have cars. N150 to one, you didn’t own a car, but at N200 and N300 you bought cars. At N400 you will buy houses.

There are opportunities that come with devaluation.”

“The only way forward in a country like Nigeria is to have the SMEs sector developed.

It’s not corporations that will fix Nigeria, it’s an amalgamation of SMEs that will take the country forward,” he said.

Pastor Tony Rapu, the convener of the event, further elaborated on the need for more engagements such as TPH Business Wednesday saying things can no longer be business-as-usual.

“The reality of the 21st century demands a better approach for high performance, and This Present House’s Business Wednesday service is a great platform to exchange ideas.

We are excited to have Mr. Agbaje on this platform with us today, and we are confident that the insights shared will inspire us to attain for greatness in spite of the current economic situation,” he said.

Vanguard, MONDAY, APRIL 25, 2016 — 31

Advertising & Media

Nigeria is key market for Alcatel —NICK IMUDIA N

ick Imudia is the Regional Director, Alcatel Nigeria and central Africa. He spoke of the company’s plan for Nigerian market with a renewed focus of bringing innovation to a broad spectrum of Nigerian consumers.

Princewill Ekwujuru reports.

Nigerian mobile phone culture Mobile phone is a basic communication and work tool for most Nigerians and as such has become an absolute necessity for people to communicate and do business. Consumers also need reliable devices that offer them all the features they expect from a smartphone but at an affordable price. As such price plays a key deciding factor for the majority of consumers who need to stay in touch and do business on the go.

A key factor in Nigeria is the connectivity issues faced due to the growing demand for mobile devices. This puts a strain on the infrastructure and has created the need for many consumers to carry a second supporting mobile device in order to stay connected through an alternate network.

Nigeria is still very much a

growing mobile market which creates the perfect opportunity for Alcatel.

Market penetration We recognize that every smartphone user needs and deserves a device that offers good performance, beautiful aesthetics and rich functionality.

As such, we’ll strive to offer choice, variety and flexibility to consumers irrespective of their budget.

With our renewed focus in Nigeria we have spent the past months giving Nigeria consumers, partners, operators and their consumers’ easy access to our vast range of affordable products.

This includes establishing the fundamentals such as in store devices, both live and dummy, promoters, a field marketing team, online purchasing / promotions and training for sales staff etc. We believe we are delivering on this and once this has been firmly established we will then turn our focus on building Alcatel into a major player in the Nigerian market. We have the brand, the products and the distribution capabilities to grow aggressively in the years to come.

Market share According to Q4 2015 IDC +

company data, Alcatel is number 5 worldwide in the total phone market with 4.5 percent market share. Alcatel is IDC Top 2015- 2016 Top 10 Global Smartphone brands and IDC 2015-2016 Top 15 Global Smart Connected Devices Brand. So globally Alcatel has strong presence, therefore when entering the Nigerian marketplace we needed to ensure that we had all the fundamentals in place.

Key to this was ensuring we had a strong in-store presence with live and dummy in store devices, promoters, a field marketing team, online purchasing / promotions and training for sales staff etc. In addition it was important for us that we partnered with the right distributors in order to ensure that the Nigerian consumers have every opportunity to get their hands on the perfect mix of Alcatel devices that are feature rich and affordable. This is evident with the Alcatel Idol 3 premium smartphone, that is currently available with its innovative technology.

West Africa hub Nigeria is a key market for Alcatel particularly from an open market perspective. However,

Lexcel Group appoints Fatai Odesile Ag MD of Grand Oak

By ANN OKAFOR

T

we have offices throughout Africa all of which are important to grow.

Phone dealers and availability In order to reach the mass market in Nigeria, it is advantageous for companies, particularly technology companies to partner with the Computer Village. This gives companies access to all areas and villages throughout the country, through their distribution and dealer network. Alcatel aims at making technology available to the market. This means making it available at affordable prices without compromising on features and style. We believe that we have managed to achieve this with the products launched in Nigeria.

Partnership with Konga.com E-commerce is seen as an opportunity for Alcatel to create deep partnerships with platforms such as Konga, Jumia and Yudala. This means that we are fully integrated in the end-to-end delivery of the product.

he Chairman and Board of Directors of Lexcel management/Nigeria Distilleries has appointed Aare Fatai Odesile as Acting Managing Director, MD of Grand Oak Limited, effective March 28 2016. Aare Fatai Odesile was the Commercial Director before his elevation to the position of Acting Managing Director of Grand Oak Limited (GOL), following the exit of the former occupant.

Aare Odesile started his Working Career with 7up Bottling Company Plc in 1991and moved to NDL as a Research and Development Officer the following year.

He rose rapidly to become the R&D Manager, before crossing over to Sales and Marketing, where he rose to become the pioneer Marketing Director of GOL in 2010.

Aviation

NCAA directs airlines to remit collected charges

By LAWANI MIKAIRU

T

he Nigerian Civil Aviation Authority, NCAA, Weekend directed all airlines, domestic & charter, operating in the country to forward in full unremitted funds accruable to the authority without further delay.

According to Mr Sam Adurogboye , General Manager, Public Relations, NCAA, the directive was handed down at a meeting with the operators on nonremittance of 5% Ticket, Cargo and Charter Sales Charges [TSA/TCA] held at the Authority ’s Headquarters Annex .

Adurogboye added that the Director General of the NCAA, Capt.Muhtar Usman presided at the meeting in company of the Authority’s top management staff.

According to the DG, the directive is with regards to the 5% TSA/TCA collected at source from the air

passengers by the airlines on behalf of the Federal Government of Nigeria.

“These sales charges are to enable all aviation agencies carry out their responsibilities of providing safe, secure and efficient regulatory services for the overall benefits of all aviation stakeholders,” Usman said.

He further said “It is imperative that all unremitted funds must be forwarded in full to the NCAA immediately.

The airlines must desist from using these funds ‘’held in trust”; The ongoing 5% Ticket/Cargo/Charter/Sales Charges automation of payments which offers realtime transparent transactions must be completed within two(2) months. This will remove endless reconciliation of data and reduce high debt profile of Airlines to NCAA.” “Reconciliation of all outstanding debts must be completed within sixty(60) days; The 5% Ticket/ Cargo/ Sales Charges must be On

Gross Ticket excluding VAT and Passenger Service Charge(PSC) only; All airlines must provide to the Authority the breakdown of the recently introduced ‘’Taxes+Fees” component on all passenger tickets which include the amount due to each Government Agency.”

“That is FAAN-Passenger Service Charge (PSC); Federal Inland Revenue Services (FIRS)-5% VAT; and NCAA 5% Ticket Sales Charges (TSC).Any add-on charge, surcharge (i.e. fuel surcharges-(YQ, etc) or any other miscellaneous added on passenger ticket must be

approved by the Authority before applying these charges on passenger tickets.”

“After exhaustive deliberations between NCAA team led by the DG on one hand and Operators by Capt Chimara O. Imediegwu of First nation on the other, agreement was reached by all parties on all the issues raised.”

Airbus introduces Airbus H175 Helicopter series to Nigeria

A

irbus, one of the largest aircraft manufacturers, has introduced its Airbus H175 Helicopter series to the Nigeria market.

Airbus Helicopters is promoting the H175 series through a demonstration tour in Lagos. The tour held from 20th to 22rd April 2016 with several key oil & gas operators.

Speaking with Aviation reporters in Lagos, Mr Regis Magnac, Vice President, Head of Operational Marketing, Airbus Helicopter, said the H175 series was designed with the support of oil companies and helicopters operators, and “ with 16 passengers aboard in an oil and gas configuration, it can fly to distances of 140 nautical miles (332KM), increasing to nearly 200 nautical miles (435 KM) when 12 passengers are carried in a long range configuration, with no auxiliary fuel tank required.”

“In a higher density configuration, it can carry as many as 18 passengers up to 105 nautical miles (269 KM). It offers cost competitiveness, performance and new standards of safety and comfort. This aircraft is perfectly suited for oil and gas operators in Nigeria.”

Magnac further said the 7-ton class H175 was developed by Airbus Helicopters as “its new-generation medium-sized rotorcraft, certified in accordance with the latest and most demanding regulatory requirements.

Benefits include enhanced flight safety, more volume per seat for passenger comfort, mission versatility, simplified maintenance, and cost effectiveness to match customer expectations.”

32 — Vanguard, MONDAY, APRIL 25, 2016

(0805 220 1997)

President’s trade mission to China T

he template for public expectation from President Muhammed Buhari’s recent visit to China was formally defined by Femi Adesina, in the President’s Media Adviser’s press release, which was published a day before Nigeria’s star-studded delegation departed Abuja in April. However, the Finance Minister, Kemi Adeosun had told Reuters and London's Financial Times, just before the China trip that Nigeria was actually in negotiation for a $2.5bn World Bank loan to partly fund the 2016 budget, because of the more favourable terms.

Shortly however, before this announcement, Adeosun had also suggested that Euro denominated, Diaspora bonds and Chinese Panda bonds including a $Rbn infrastructure loan were also being considered to fund the budget deficit. Inexplicably, the signing of the $2bn Chinese loan did not materialise, but Kemi Adeosun was however quick to confirm thereafter that her Ministry was actually looking at other home grown solutions to fund the 2016 Budget deficit.

Evidently, however, after President Buhari’s meetings with Xi Jinping, protocol agreements on various areas of co-operation and assistance were signed; according to Garba Shehu, the President’s media assiatant, these included for example, $1bn Abuja-Ibadan-Lagos Greenfield Expressway, a 300 megawatt solar plant in Shiroro; other more modest deals which were also sealed in housing, rail transportation and floating gas facilities.

Indeed, in another major agreement, China had also offered a $6bn loan to fund infrastructure projects in Nigeria; according to Geoffrey Onyeama, Nigeria’s Foreign Minister, “ the offer is a Credit

that is on the table as soon as we identify the Projects”. In the light of Onyeama’s statement, it is disturbing that the Nigeria delegation embarked on the China Trade mission without a clean copy of a defensible and coherent “Wish list” that would have made access to the $6bn infrastructure loan immediately possible. It should however be instructive, before we commit to the $6bn offer, to appraise why the earlier infrastructure loans obtained four years ago by former President Jonathan’s administration failed to positively impact our economy.

However, Nigerians should also be concerned with our government’s apparent fixation on external loans which have yielded minimal social impact over the years, especially when, our own domestic money market, remains embarrassingly awash with excess Naira liquidity, while our own CBN also, ironically sits on almost $30bn reserves “just awaiting auction” to banks!

Conversely, the Chinese should be encouraged with special concessions to inject the $6bn as direct private investment in Nigeria to build and independently operate these critical infrastructural projects for a period not exceeding 15years, with a clear provision for private sector Nigerian partnership that would jointly run the establishment, from the tenth year, after project is commissioned.

Notably however, the news of a Currency Swap agreement between Nigeria and China seems to have captivated public attention. Basically, the swap implies that China would set aside billions of dollars equivalent of its currency (the Renminbi) from which Nigerian importers can

directly exchange their Naira at pre-determined exchange rates, without first procuring dollars to complete the transaction. Regrettably, the Presidency has not published the amount, nor tenor and applicable exchange rates that will be applicable to transactions and settlements under the swap arrangement.

Nonetheless, while briefing State House correspondents on gains of the China trip, Foreign Affairs Minister, Geoffrey Onyeama suggested that the celebrated agreement was not a currency swap as widely reported, but a recruitment of Nigeria into a partnership “that would facilitate China’s drive to

Nigerians should also be concerned with our government’s apparent fixation on external loans which have yielded minimal social impact over the years ...

Business & Economy I'm not convinced on Nigeria's benefit from previous devaluations —BUHARI

P

resident Muhammadu Buhari on Friday said he was yet to be convinced that the vast majority of ordinary Nigerians would derive any tangible benefit from devaluation of the Naira. The president said this at a meeting with members of the Council of Retired Federal Permanent Secretaries in Abuja. He said that he still held the conviction which motivated his principled resistance to devaluation in his first tenure as head of state.

“When I was military head of state, the IMF and the World Bank wanted us devalue the C M Y K

naira and remove petrol subsidy but I stood my grounds for the good of Nigeria. The naira remained strong against the dollar and other foreign currencies until I was removed from office in August, 1985 and it was devalued.

“But how many factories were built and how many jobs were created by the devaluation?

That is why I’m still asking to be convinced today on the benefits of devaluation,” he said. Buhari welcomed the council’s pledge of support for the successful implementation of his administration’s change agenda, especially in the priority areas of improving

security, curbing corruption and revitalising the national economy.

“I am glad you have rightly identified the key issues we campaigned on. We need a dynamic bureaucracy which will not mislead us into taking wrong decisions,” he added.

The Pioneer Chairman of the council, Chief Philip Asiodu, expressed the readiness of members of the council to assist in ensuring the success of Buhari-led administration.

We are non-partisan. The interest of Nigeria is paramount to us and we are anxious that you should succeed,” Asiodu said.

internationalize its currency”.

“So, far us” according to Onyeama, “ it has given us (our economy) greater opportunity, so that those people (who cannot readily access dollars) can now also import, notwithstanding the shortage of dollars”.

Similarly, CBN Governor, Godwin Emefiele, also noted in a ThisDay report of 18th April that “the agreement on currency swap with China will definitely benefit Nigeria because the essence of the mandate is that Nigeria is designated as the trading hub with China in the Ecowas sub region.” Emefiele further added that “ we believe that using the Renminbi will improve trade with China, as this will encourage importers to open L/Cs in the Chinese currency for the importation of raw materials, equipment and machinery from China, rather than other trading regions, so the agreement will encourage trade between both Countries”.

However, Lin Songtian, a senior official of the Chinese Foreign Ministry noted that the deal on Yuan transactions “means that the Renminbi is free to flow among different banks in Nigeria, and the Renminbi has been included in the foreign exchange reserves of Nigeria”. Indeed, Lamido Sanusi, as former Governor had converted about 10% of CBN’s dollar reserves into Yuan about 4 years ago!

In effect, in order to facilitate rapid Yuan acceptance in our sub-region, Nigeria as hub, will invariably host a Clearing House with affiliation to the Peoples Bank of China to allow the Renminbi to become a common settlement currency which can be used for bilateral loans or aid. Ultimately a New bank with affiliation to the China bank will also be established and dedicated to intermediate on Yuan transactions in the sub region, as a product of the Currency

Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Franklin Alli Ifeyinwa Obi Rosemary Onuoha Nkiruka Nnorom CONTRIBUTORS Princewill Ekwujuru Jonah Nwokpoku Naomi Uzor Providence Obuh LAYOUT

Swap.

Furthermore, China’s official News Agency reported that President Xi Jinping expressed interest in economic cooperation with the Nigerian delegation, particularly in areas like oil refining and mining; however, it is not yet clear if the Currency Swap deal also implies that China will pay for Nigeria’s crude oil in Naira or Yuan.

Ultimately, this currency deal will bolster our Renminbi reserves, but this will invariably lead to a corresponding drop in our dollar reserves; ironically however, China may readily depreciate its Yuan to promote export price competitiveness of its products in the United States and other dollar denominated markets.

Unfortunately, in such event, Nigeria’s increasing Renminbi reserves would have been devalued and would buy less and less dollars than before.

It is instructive that, China is already in similar bilateral currency swap agreements totaling RMB 3.137Tn (about $500bn) with 31 Central Banks including the UK and South Africa, and the trade volume with these countries has since exceeded RMB 11 Trillion after the swap agreements.

Nonetheless, CBN Governor Emefiele has however observed that “ we are working to encourage exports of raw materials to China in order to reduce the trade imbalance” which is presently, clearly heavily skewed against Nigeria with an annual import bill of about $15bn to China.

However, It is not yet clear how Nigeria’s industrial production and output will ever become internationally competitive enough to reduce this trade imbalance, particularly when domestic inflation rate is trending at over 12% while cost of funds to real sector presently exceed 20%!

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