FEBRUARY 2, 2015
*ROUNDTABLE - From left: Bob Collymore, Chief Executive Officer, Safaricom, Kenya; Uto Ukpanah, Company Secretary, MTN; Segun Ogunsanya, CEO & Managing Director, Airtel Nigeria; Elias Masilela , Executive Chairman, DNA Economics, South Africa and Foluso Phillips, Chairman, Nigerian Economic Summit Group at the Africa Sustainable CEO Business Roundtable held at Intercontinental Hotel, Victoria Island, Lagos.
Insurers, traders differ on cover for fire incidents By ROSEMARY ONUOHA
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nsurance operators and traders are split over the lack of insurance cover to mitigate losses suffered by traders during fire incidents. Market fire disasters have become a recurring menace in Nigeria and it is estimated that the country loses over N50 billion from these fires every year. Recently some traders in the Balogun market, Lagos Island, suffered losses running into billion of
naira when a fire incident engulfed th the market on January 11 . Mr. Ogbonna, was one of the traders affected by the fire incident. He said the fire destroyed N35 million worth of shoes, which was delivered the previous day. Wailing uncontrollably, he screamed that part of the money was borrowed. Another woman, Mrs. Gbadamosi, an attendant in one of the shops, said that her employer had goods worth N27 billion in his containers to be offloaded on Monday, by the time
they got to the market, nothing was remaining. Some of the affected traders only just returned from their respective home towns, where they spent the Christmas and New Year break, only to be faced with the disaster. The impact of the fire incidents is being aggravated by lack of insurance cover for the goods. This, according to traders was because insurance companies in the country were unwilling to provide insurance cover for traders.
The traders, for instance, accused insurers of inserting frivolous clauses into insurance contracts which have made it entirely impossible for them to insure their businesses, whereas, insurers on their part insisted that the traders have consistently refused to embrace insurance as a reliable risk transfer mechanism. According to the Coalition of Markets and Traders Association in Lagos (CMTAL), the unwillingness of insurance firms to remove such clauses that prevent them from insuring is a major factor why losses incurred from fire disasters are always massive. Chairman of the Association of Igbo in Commerce (AIC), a part of CMTAL, Mr. Nnamdi Nwigwe said that the major reason why it appears as if traders refuse insurance as a risk transfer mechanism is due to the fact that such clauses have not been favourable to traders. Nwigwe said, “Some things which insurance companies demand that we put in place are beyond us, rather these are things which the government should provide for the people. For instance, some insurance companies require a fire service station to be located in the market before they can insure our businesses, but such things are things that only the government can provide. The fact that traders are not insuring is partly the fault of insurers and the government because some facilities that should have been provided by government so that insurance can come in, cannot come because these facilities are not there. So where such facilities are lacking, insurers have abandoned us to our fate rather than designing products that will suit our peculiar needs.� Reacting to the position of the traders, Managing Director of Linkage Assurance Plc and Chairman of Nigerian Insurers Association, NIA, Mr. Godwin Wiggle, said that market traders jettisoned insurance by refusing to pay premium because they see the premium as too expensive. Wiggle said, “The market traders have refused to pay premium because they say that the premium is too expensive. But if you compare what they lost to the Balogun inferno, it is no way near what they would have Continues on page 22 C M Y K
22 — Vanguard, MONDAY, FEBRUARY 2, 2015
Cover Story
Vocation and Technical Education – Key to improving Nigeria’s development (4)
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PARLEY - From left: Mr Rasheed Mohammed, Executive Director, Mikado Nigeria Ltd; Bryon Kennedy, Global Trainer, USN, Mr Mike Ojeme, MD/CEO, Mikado Nigeria Ltd and Donovan Dunn, African Development Manager, USN during the media parley and introduction of Ultimate Sports Nutrition (USN) Brands to Nigeria by Mikado Nigeria Ltd held in Lagos on Thursday. Photo Lamidi Bamidele.
Insurers, traders differ on cover for fire incidents trade lines against Continues from page 21 paid as premium if they had insured their businesses. The traders should know that what they lost as a result of the inferno is also a huge loss to the economy. So it will be better for them to embrace insurance going forward.” Reacting to allegations that insurers refuse to insure market traders, Wiggle said, “The industry has been trying to create awareness for these traders on the importance of insurance on regular basis. Moreover, do you wait for the doctor to come to you when you need one? You are the one that will go to the doctor. So the economy is the ultimate loser for the consistent refusal of our market traders to insure their businesses.” Market fire outbreaks in the country Statistics from the Lagos State Fire and Safety Services show that in 2013, a total of 1,774 fire outbreaks occurred. The fire service acknowledged there were massive losses to fire in the year, claiming the losses were difficult to quantify. In 2014, the value of goods lost to fire in the state was put at N14.99 billion in about 1,499 fire cases recorded between January and November. Except accurate measures are put in place, there are indications that more losses are likely to occur in 2015 going by the number of fire C M Y K
The onus is now on insurance practitioners to generate appropriate products and distribution channels that will cater for market traders
outbreaks already recorded in the state. Between January 1 and now, no fewer than 20 fire incidents have occurred in the state with losses estimated at billions of naira including several lives. Among the affected areas are the Balogun Market on Lagos Island, Oko Baba Sawmill in Ebute Meta, another in Igando area where four houses were razed recently, another at Ijaniki area where a building comprising six apartments was completely razed and an eight-monthold baby roasted to death. The way forward On the way forward, Managing Director of Riskguard Africa Ltd, Mr. Yemi Soladoye said that the starting point is for insurance operators to begin to develop products along
the conventional insurance that is readily available. Soladoye said that if such products are developed, the onus will then be on insurance practitioners to market such products to trade associations. He said that in the history of state governments in Nigeria, it is only Lagos State Governor, Babatunde Fashola, who has shown support for insurance because he has always charged market traders to always insure their businesses whenever there is a market fire. “The onus is now on insurance practitioners to generate appropriate products and distribution channels that will cater for market traders. It could be difficult for these traders to deal with insurers, so the best thing is to link them with consultants on free of charge basis that will sit down with them and advise them on the right products for their businesses. The consultants will look for landmines in the insurance contracts and advise the traders to insist on having a policy that is peculiar to their needs. Also, through these dealings, the traders can decipher if they can carry on with normal insurance covers or go for covers with extra premium. “Enlightenment and education is a major thing when dealing with market traders. After that, the right product will be packaged for them under the terms peculiar to them. Also the Insurance Consumers Association of Nigeria can help them to protect their interest,” Soladoye stated.
he focus is on the roles of technology and vocational education in enhancing entrepreneurial skills that will equip students for entrepreneurship education in Information and Communication Technology (ICT.) driven technological environment. The world has become globalized and the future prosperity depends on comparative advantage. This comparative advantage hinges on people and their technical or technological sophistication. Towards this, some crucial entrepreneurial and technical skills needed by the students in colleges of education (technical), polytechnics and universities to meet the trends in a global economy is analyzed. Technology education is to be considered as the key agent of technology development, either as a way of developing human capacity, increasing the shield work force for modernization, industrialization, environmental development or as a matter of personnel freedom, developing capability and empowerment. Technology education is increasingly recognized to be central to both the origins of technological development and challenges and to the prospects for successfully dealing with them (Alam, 2009). Decision makers at all levels, need timely, reliable access to knowledge generated by technology and technical education to introduce rational policies that reflect a better global understanding of complex technical, economic, social, cultural and article issues concerning the society, and our environment. Technical decision making and priority setting is an integral part of overall development planning and formation of technology development strategies. Above all, technology education is a human right and, as such, should receive priority in the allocation of national resources. It has become very necessary not to only keep technology education bound to the role of manufacturing skilled manpower but also to economic development and global economy. In Nigeria, technology education was previously not seen as fundamental for national development, or for the economic development, but for the school dropouts, and other social and political development within the nation and for individuals. Hallak (1990) argues that technology education is also linked to human resources development and that this has an impact on more than just economic growth, but also an impact on the wider development of individuals and societies. According to him, it contributes to: (a). Individual creativity, improved participation in the economic, social and cultural roles in society. (b). Improved understanding of an individual and heir respect for others, thus promoting social cohesion and material understanding (c) Improvement in health and nutrition. (d). Improved chances of economic development. (e). Improved technological development. (f). Socio-cultural change. (g). Democracy and equality (h). Ecological development/quality of life (increasing people’s awareness of their environments). From our analysis so far, it is clear that modernization and economic development, depends on investment and appreciation of modern trends in technology education. According to Woodhall (1997) investment in technological education and training produces benefits for the individual and for society as whole. The roles of technical and vocational education in enhancing entrepreneurial skills using information and communication technology is very important in training for self-employment, self-reliance and skills acquisition now that government cannot employ every graduate. This could be achieved through the development of entrepreneurial skills in technology and vocational education through information and communication technology. Technology and vocational education programme of our tertiary institutions should be directed to focus on enhancing the training for entrepreneurship in ICT so as to be functional in today’s world of work and the global economy.
Vanguard, MONDAY, FEBRUARY 2, 2015 — 23
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hen late President Umaru Musa Yar’Adua decided that diesel price be deregulated, it was in line with his administration’s pledge to dismantle the alleged fuel mafia. But several years after the deregulation, the expected market behaviour of a deregulated product is far from being realised in Nigeria. The price of diesel has remained high in Nigeria despite the crash of oil prices in the international market to below $50 per barrel. The mafias who have found their seat in President Jonathan’s economic management team have refused to let price of diesel come down. These men of yesteryears who keep recycling themselves in the corridors of power are denying Nigerians the benefit of deregulation of this one essential economic product. Following President Yar ’Adua’s approval, the NNPC increased the ex-depot price of AGO from N60 per litre to N69, while the price of LPFO was raised from N22 per litre to N44, representing a 100 per cent hike. But in no time, under the disguise of rising oil prices, the price of diesel went up to N162 per litre. But prices of crude have long crashed and diesel price has not come down in line with global market practice in a free market environment. Following the crash of crude oil prices, the maximum indicative benchmark of open market price of diesel is about N99.11 per litre as of today, going by the Petroleum Products Pricing and Regulatory Agency. Surprisingly, the price of the product in filling stations across the country ranges between N155 and N165 per litre with PPPRA not lifting a finger about the price or raising eyebrows about the unwholesome trend. The price of crude oil, which constitutes a major component in the pricing template, had
Diesel cabal at it again, ripping off Nigerians plunged by about 60 per cent since June 2014 when it peaked at $115 per barrel. If Nigeria were a country where leaders walk the talk, diesel has been deregulated and ordinarily, if we were to have an organised government, since the price of crude oil has fallen by more than 50 per cent, the price of diesel is supposed to have fallen a long time ago. Unfortunately, Nigerians are not getting the benefit of the so-called deregulation, and it also shows that the government agencies are not intervening in matters that touch the welfare of the populace except what benefits the ruling class. If a government allows for certain measures to take place in its economy, it is also the duty of the government to make sure that it is not being abused. PPPRA, DPR, NNPC and the Ministry of Petroleum Resources are turning their eyes the other way because powerful Nigerians are involved, milking the people and donating to parties for
political gains. Ordinarily, if there were laws governing the deregulation of diesel, even before the price of petrol was reduced; Nigerians had expected that diesel marketers should have been the first to reduce their prices.” But the average Nigerian
If a government allows for certain measures to take place in its economy, it is also the duty of the government to make sure that it is not being abused
businessman is greedy, exploitative and also has the intention to continue to shortchange Nigerians. Fortunately for them, it is in their interest for government not to intervene and so they are still going ahead shortchanging Nigerians. The question is: if diesel is still being sold for up to N160 per litre in an era of falling oil prices, what are the so-called regulators doing about it? There is nowhere in the world where there is absence of regulations. You don’t just leave things to the market completely. If you want to do that, then liberalise everything and you then protect the interest of the consumers. Currently, the daily average demand drive consumption of the three main products stream are as follows: Premium motor spirit (petrol) 33,500, 000 Liters Automotive Gas oil (diesel) 15,000,000 Liters Household kerosene 11, 000,000 liters. Today, more than 90 per
cent of petroleum products consumed in the domestic market are imported, usually at costs which naturally reflect international crudeoil prices. Yet, development in the international oil market does not reflect in domestic diesel pricing. Diesel is a petroleumbased fuel that is used to power many types of vehicles and boats. It’s made of a blend of crude oil components called hydrocarbons. The components for making this fuel are refined out of crude oil, usually by fractional distillation. AGO demand is driven by Nigeria’s inadequate supply of power to business places. Households, offices, eateries, banks, hospitals and government parastatals are spending millions and will still spend millions on diesel consumption as the electricity supply situation is not likely to change significantly any soon, hence dependence on generators and mini-power plants will surge. While households, offices, eateries, banks, hospitals and government parastatals that depend on diesel to operate are being ripped off daily by the current sharp practices in the diesel racketeering, it is the ordinary Nigerian that bears the burden.
Business & Economy
FG urged to finance capital expenditure via capital market
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perators in the Nigerian capital market have called on the Federal Government to source funds from the local market to finance capital expenditure instead of relying on the yearly meager budgetary allocation budget. The operators who spoke at the one day dialogue on “Capital Market & the 2015 Federal Budget” organised by Chartered Institute of Stockbrokers, CIS, Association of Stock broking Houses of Nigeria, ASHON, and Association of Issuing Houses of Nigeria, AIHN in Lagos criticized the present 2015 budget, saying that the N634 billion earmarked for capital expenditure was inappropriate as the country requires more
infrastructure that would boost production and enhance the standard of living of the people. The guest speaker at the occasion, Mr. Tola Mobolurin said “The budget of 2015 is a budget of austerity and not a transition budget. The major assumptions in the 2015 Federal budget, which include a GDP growth rate of 5.5 percent, benchmark oil price of $65 per barrel, daily oil production volume of 2.28 million barrels and average exchange rate of N165 per dollar are not realistic because revenue projections are not in tandem with the reality of the oil market from which the bulk of the revenue is derived. The instability in the market is such that market reality changes every week. It is a tough job.” The Chairman,
ASHON, Mr. Emeka Madubuike, said “The critical role that the government must play in a country is to ensure that it provides adequate welfare for its citizens. Countries all over the world ensure that they harness the capital market and deploy the long term funds to the critical areas that would provide benefits to the people.” To this extent, he called on the government to fund the critical areas with long term funds from the capital market rather than the budget. Speaking as well, Chairman of AIHN, Mr. Victor Ogiemwonyi said “The budget is a critical component of economic management and must be taking very serious. The 2015 budget is not realistic
considering the drop in oil price. Also, the present situation where recurrent expenditure is reduced by six percent is not enough while the capital expenditure is reduced by 30 per cent is not good for an economy yearning for major improvement in infrastructure.” Continuing, he said “There is need to reduce Monetary Policy Rate, MPR , so that interest rate would get reduced . We therefore implore the Federal Government through the Central Bank of Nigeria , CBN to commence the reduction of interest rate by a downward review of the MPR, especially now that we have achieved a moderation in inflation to single digit in the last two years. .In his own comment, President of CIS, Mr. Albert Okumagba said “All over the world, the capital
market drives the entire economy as it provides a platform for government at all tiers to access medium and long term fund to execute developmental projects. Also, there is need for increased savings and investment , hence we call on the Federal Government to promote the culture of national savings through appropriate incentives. In his remark at the occasion, Acting Director General, Securities and Exchange Commission, SEC, Mr. Mounir Gwarzo sad “The Federal government has planned the 2015 budget in a manner that ensures the most vulnerable are protected while safely pursuing the ultimate goal of economic diversification. I think beyond this year ’s budget, the capital market must begin to assert itself as the most reliable medium for government to source for funds to finance critical infrastructure.
24 — Vanguard, MONDAY, FEBRUARY 2, 2015
Interview
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ast week Tuesday, the CBN Governor, Mr Godwin Emefiele met with the organised private sector to discuss developments in the foreign exchange market. He gave insights into the continued pressure on the Naira, blaming it on speculative activities of operators. He urged the Nigerian business community to focus on local production, promising that the CBN will assist local manufacturers of products that are now being imported into the country. Excerpts:
No cause for fear, panic
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would like to say, just to underscore a point, that people are nervous, people are worried, let me assure you and say that there is no need to be nervous, there is no need to panic. No doubt there is a need for concern, and we will certainly find a solution to the current crisis caused by falling oil prices. It is a journey that all of us are already in. I say with commitment, we will pass through it. That is why I am trying to say that there is no need for anybody to be nervous.
Global economic trend
The important thing is that the global economy has shown in some economies, some recovery. The recovery is seen to be weak, particularly in the United States, where we see unemployment dropping to as low as 5.8 per cent. We have seen inflations at some low levels and we have seen the growth in the GDP in the US come up to as high as 3.8 per cent in 2014. Another macro economic development in the world had to do with falling commodity prices, I mean we are only seeing crude oil prices and I give you an example. The price of gold fell from a peak of about $1,380 per Pound in March 2014 to as low as $1,140 per pound in November 2014. imilarly, the price of copper fell by nearly 11 per cent in the cause of the year. So what I am saying here is that what is happening in the global economy is not just about the drop in crude oil prices, we have seen drop in prices of all commodities, we have also seen in the world, rising geo-political tension and conflicts, the battle in Ukraine and of course the EU and the US taking on Russia, about the annexation of East Ukraine, and we also had geo-political tensions in the Middle Eastern.
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Negative trend in global economies
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ell, the negative is that unemployment in some countries is rising particularly in advanced and emerging markets. For C M Y K
instance in Spain the rate of unemployment is about 23.7 per cent, Italy 13.4, Greece 25 per cent, South Africa 25 per cent and in France about 10.4 per cent. These are some of the things that have happened in the world in the course of the year, we saw the tapering in the US, where at a point, the US was injecting about $35 billion into the US economy on a monthly basis and of course, the world is awaiting the effect of that.
What about Nigeria?
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n Nigeria, what we have seen is that we have some positives; we have seen the robust GDP growth rate of 6.35 per cent which is among the highest in the emerging markets in the world. We have seen inflation stabilising to about 8 per cent as at December 2014 compared to as high as 16 per cent that we saw as far back as two and half to three years ago. This is a strong positive for Nigeria in the sense that we have tried as much as possible to keep inflation low and it is not only by using monetary policy tools to control inflation, but also by the diversification of the economy particularly in the agricultural sector, helping to keep prices low. In December 2014, some of you who may have monitored commodity prices, I mean staple foods like rice, beans and garri, would have observed that prices remained low, at worst, marginally
z Emefiele
Nigeria has no business importing tooth picks — EMEFIELE higher than they were. Given what has happened, one would naturally have expected that prices will go up and people will begin to feel
the effect, but I think this did not happen as a result of some of the policies that have been put in place both by the monetary and fiscal
We have seen the robust GDP growth rate of 6.35 per cent which is among the highest in the emerging markets of the world
authorities as well as the political authority to ensure that the Nigerian economy remains resilient. Nigeria’s GDP increased by an impressive rate of 6.4 per cent last year and it is pertinent to note that the growth rate have been driven largely by the non-oil sector of the economy. Deficit budget also have decreased and we have considered that positive, deficit budget increasing to N680 billion as at November 2014 from about N4.15trillion in 2013. So things are not that bad and I think we should be happy about that.
Negative effect on Nigeria
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zToothpicks: Despite vast expanses of forested landscape nationwide, toothpicks are still imported
ome of the negatives that we have seen are that as a result of the drop in crude prices, between June 30 and December 31, 2014, price of crude oil had dropped by 50.7 per cent from about $112 per barrel to $55 per barrel in
Vanguard, MONDAY, FEBRUARY 2, 2015 — 25
Interview December and right now, we are talking about below $50 per barrel. This decline is about 50 per cent, from December 31 and now. Unfortunately, as a result of the drop in prices resulting in dropping revenues, we have seen the foreign reserves drop by about 12.3 per cent to about $39 billion in July 2014 to $34.26 billion on January 22, 2015.
rank one of the highest, up to three years ago we were importing cement into Nigeria, but today we are not only producing cement for our local consumption, we have started to export cement. Alhaji Dangote is at the forefront of some Nigerians who have said let’s take this up and let’s begin to revive the situation and improve our economy, it is not rocket science to get determined and tell yourself that Nigeria has limestone, if we have limestone what is stopping us from being able to blast our limestone and convert it into cement, use it not only for domestic consumption but also for export?
Impact on exchange rate
Naira has depreciated by about 8 per cent and 13 per cent at both official and interbank markets respectively in 2014 and by 5.6 per cent at the inter-bank market as at January 23, 2015. As a result of the drop in crude prices and the fact that people feel that the reserves are dropping, we have seen the movements into a bearish market in the Nigerian Stock Exchange, to the extent that today, the NSE All-Share Index closed at about 43,657, a decline of about 15. 9 per cent in 2014 and 29, 687 as at January 22, 2015. The trends in the oil prices has shown that during the year under review, we have seen oil price drop by nearly about 60 per cent from a peak of about $115 per barrel in January 2014, to as low as $50 per barrel in January 2015. Another spill over from the slide we have is that in January 2014, reserves was as high as $42 billion; by April, it has dropped to below $37 billion, and sometime in July, we were able to move it up to about $39billion and between October and now, we have seen the reserves dropping under pressure.
Exchange rate movement
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n January 2014, the exchange rate at the official window was about 155, and the inter-bank and the bank 116 in January 2014 and of course, moving up to around October of 2014 when we began to see the reserves drop and the pressure on the exchange rate; that is what we have at this point where the official window is about 168/170 and of course, the interbank at slightly higher than180. Now what does history teach us? From history, we have the pre-crisis period, crisis period and we have the post-crisis period. In January 2007, both the official and the interbank rate, the BDC during the precrisis period, we could see a sort of convergence of the three markets at about 118 and this continued up to 2008 and in October 2008, we saw during the crisis period the Bureau de Change price
Need for local production
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hy is it that we r e unable to do this in Nigeria? Simple wool we import, tomatoes, we import, in fact, we import rice, we import fish, sugar. You can imagine what will a
z Emefiele
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It is important for all of us to know that if we import one set of toothpicks , it impacts on the reserves hitting the roof at almost close to about 190 and the interbank also moved up as we see the official price moving up to about 158, moving down to about 155. You can see that during the crisis period, you normally find the official market moving too high and there will be divergence between the BDC markets as well as the official and interbank market rate during the crisis period. Importation essential goods
of
non-
o the issue therefore is, what is the extreme pressure on the exchange rate in Nigeria? We have seen demand pressure on the currency arising likely from the lopsided dependence on imports. Today in Nigeria, toothpick is being imported, tomato paste, furniture, rice, fish, sugar, petroleum products are being imported into Nigeria. Perhaps it is important for all of us to know that if we import one set of toothpick, it impacts on the reserves, so why should we be seen to be importing items that we can produce locally? Why should we be importing tooth picks? I will give credit to the cement industry. The lesson in history is that if we are committed to a cause and we stand by that commitment to that cause, there is no how we will not improve our economy. Some years ago, Nigeria was importing cement and of the list of items imported into Nigeria then, cement used to
To reduce demand pressure on our domestic currency we need to see ourselves producing most things that we are importing happen, how employment will be created, if you take something as simple as fish, what does it take to develop an aqua-culture and in the process of developing the aquaculture industry, you will also be developing the feed mill industry, because you will need the feeds that will feed the fish in the aquaculture business. As you produce the feeds, you will also be growing the maize that you need for that industry, can you imagine the entire value chain; the kind of employment and improvement in GDP that will be created as result of these
We have tried as much as possible to keep inflation low and it is not only by using monetary policy tools to control inflation, but also by the diversification of the economy efforts? I am saying if we are doing it in cement, why should Nigerians ever think that it is difficult to do it in fish? What does it take to grow rice? I am happy that efforts are being made, I am sure that in the course of time, we are not going to ban importation of rice, we are going to say that we will no longer provide foreign exchange if you want to import rice into this country. Rather than import rice, I will advise you go into the production of rice, if you want to use your dollars that you kept somewhere to import rice no problem, but we will not allocate foreign exchange for you to import rice. The same way we will graduate into other products. I keep saying that before I was born, we have been importing milk, what does it take to produce milk, are we saying that if it has been done in other countries, it cannot be done in Nigeria? I do not believe so; it only involves commitment; that is what we are saying. The only thing that can help us to reduce the demand pressure on our domestic currency is that we need to see ourselves producing most things that we are importing, that will help. Aside from rice, petroleum products are being imported, and a lot of speculative demands going on in the different sectors in this business. Take a cue from Dangote liko Dangote has invested about $9 billion in the petrochemical business, and he has committed to Nigerians that by the end of 2017, he will begin to produce 500,000 barrels of petroleum products in this country. What that means is that by that commitment, we will stop
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Continues on page 26
26 — Vanguard, MONDAY, FEBRUARY 2, 2015
Interview Continues from page 25
SAHCOL gets world Customs organization award of merit
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he Skyway Aviation Handling Company Limited, SAHCOL, last week won the World Customs Organization (WCO) Award of merit, for showing “exceptional support \collaboration for customs towards the realization of its mandate.” The award certificate, signed by the SecretaryGeneral, World Customs Organization, Kunio Mikuriya was presented to the Managing Director \CEO, SAHCOL, Oluropo Owolabi, by the Comptroller-General of the Nigerian Customs Services, Dikko inde Abdullahi, on the occasion of International Customs Day Celebration, at the Nigerian Customs Service Headquarters, Wuse, Zone 3, Abuja. While presenting the award certificate of merit to SAHCOL, the ComptrollerGeneral of Customs noted, that in line with World Customs Organization “practice of rewarding excellence, Skyway Aviation Handling Company Limited (SAHCOL) has been selected as an Outstanding Terminal Operator to receive this year’s World Customs Organization (WCO) Award, for rendering exceptional services to the international customs community.”
Interim report on crashed MH370 to be published March 7
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alaysian authorities will publish a preliminary report on the disappearance of Malaysia Airlines flight MH370 March 7, a day before the first anniversary of the incident, an official report said last Wednesday. According to Deputy Transport Minister Aziz Kaprawi, the crashed report will be posted on the website of the department of civil aviation. He said “We have not concluded on the status of the plane, as the search is still ongoing,” the New Straits Times quoted him as saying.”I cannot reveal the details of the interim report but it will be on the investigation that has been carried out so far in search of the missing plane,” he Aziz said. The plane disappeared March 8, 2014, with 239 passengers and crew on board after “deliberately” changing its course, according to experts, just 40 minutes after take-off from Kuala Lumpur en route to Beijing.
importing petroleum products in Nigeria come end of 2017. You do not have to build a $25 billion worth of refinery, you can do a modular refinery and that is why I am saying that if I find somebody who says he wants to invest $9 billion in petrochemical business and I find someone who wants to invest money in the oil and gas business where we are going to be producing polypropylene, not only for domestic consumption but also for exports, if we have people who are saying yes, we can commit some billions of dollars or over $1 billion for the production of rice or we have people who want to commit money into the business of aqua culture, or in sugar, if somebody invests $9 billion and he raises equity, somebody brings his money and says I want to invest $7 billion in fertilizer business and out of that he brings $3.5 billion of his money as equity and he puts it in that business, and he tells foreign banks, give me $1.7 billion loan and he tells local banks give me $1.75 billion as loan and he comes to central bank and say he wants N50billion, we will assist him as the Central Bank of Nigeria in support of his effort in helping the country produce what it would have imported. What are we saying? Even if we have been accused of being involved in questionable physical activities, what we are saying is that what seed can you sow to help people who are showing commitment to help our economy? What can you do to help and encourage people who are showing commitment to our economy? That is the bottom line today.
CBN'll support import substitution investment
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hy would CBN or the government help this people, because they are able to reduce the demand pressure on our local currencies. What we find is that if they can do this, we can conserve our external reserve and do something good with it and like I said earlier, when external reserve goes up, there is a direct relationship between external reserve and exchange rate. We have seen speculating demand, we have seen rent seekers taking advantage and I will warn that those of you who are speculating, will lose your money, and I have told a few people that there is no
‘Nigeria has no business importing tooth picks’
zCBN Governor, Emefiele, and Mrs Sarah Alade, Deputy Governor at an outing
CBN as the monetary authority stands to support the economy, defend the reserves and the country’s exchange
need to speculate, we have about $34 billion in reserve, don’t forget that I said in 2007, our reserve was less than $10 billion, we survived with that. I know economic activities have improved but I am saying that $34 billion can support this economy, there is no need for you to panic, if what you need is to import just one microphone, do, there is no need for you to be nervous, there is no need for you to panic, you want one microphone, you import five. If you are supposed to import one bottle of water, please continue, there is no need for you to think that because of drop in prices, that the exchange rate will go up, you are contributing into putting more pressure on the naira and speculating demand and that will push exchange rate high. If what you say is that you want to continue to do your business, that is importing, do it in an orderly manner, there is no need for you to be nervous, I
am appealing to all of us who are speculating with the currency to stop and in the cause of that, you will find out, because I heard a few people saying they are doing forward transaction at 190 and above 190, you will lose money, I assure you, there is no need for you to panic.
Capital flight
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s a result of the drop in prices, we have seen increased foreign exchange out-flow, no problem, you brought in your money, what we say is free entry, free exit but do it in an orderly fashion and that is why we introduced some measures because we have seen that people were beginning to behave in an orderly fashion. If your demand is legitimate, we will meet all legitimate demand, we would not be concerned about illegitimate demand, what did we do as a result of what we saw in the market (as a result of the pressures), we had to re-classify some eligible goods and services from their
R class window to the interbank window, conduct special intervention budgeting market in order to stabilise the rate. We will do more - prequalification of customers’ applications to forestall portfolios’ demand and there is need for us to also stop that.
Hope for all in 2015
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015 is not bad, it will be good but we need to take certain actions. We believe that in the cause of the year, there will be reversal in the crude oil prices, if that happens, it will help us in this nation. We are determined to ensure our GDP growth rate is protected at about 5.5 per cent, we will try to see what we can do to keep inflation rate within the bound that we have set for ourselves, but what is most important for us here is that we need to begin to diversify our economy. We need to begin to look at the structure of our economy and tell ourselves that as we stopped importation of cement and today we are exporting cement, we can do the same and encourage those who are ready to produce to support the economy and help conserve our reserves and ultimately keep our exchange rate strong. Inflation is expected to be under control in 2015. The CBN as the monetary authority stands to support the economy, defend
Vanguard, MONDAY, FEBRUARY 2, 2015 — 27
Banking & Finance BY BABAJIDE KOMOLAFE
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he value of electronic payment rose by 150 percent in two years to N35 trillion in 2014, reflecting the impact of the cashless policy. Deputy Governor, Economic Policy, Central Bank of Nigeria (CBN) Dr. Mrs Sarah Alade disclosed this in Lagos at the inauguration of the Payment System Strategy Board, Payment Scheme Boards and Initiatives Working Groups. “Ever since the implantation of the PSV2020 initiatives in collaboration with the banking community and other stakeholder, Nigeria has witnessed an impressive growth in electronic payments and a steady shift from the dominance of cash payment”, Alade said. From N13.687 trillion in
Electronic payments hit N35 trillion in 2014 2012, value of electronic payments, excluding ATM transactions, rose to N35 trillion in 2014. While transactions through the NIBSS Electronic Fund Transfer rose 7.5 percent to N14.6 trillion from N13.6 trillion in 2012, Point of Sale (PoS) transactions rose 550
percent to N312 billion from N48 billion. Similarly the NIBSS Instant Payment (NIP) transactions rose by 423 percent to N19.9 trillion from N3.8 trillion in 2012, while internet and Mobile payment transactions rose by 108 percent and 8,400 percent respectively. While internet
Nigeria has witnessed an impressive growth in electronic payments and a steady shift from the dominance of cash payment
UNVEILING - From Left: Mr Eyo Bassey, Managing Director/CEO, Payporte Global System Ltd.; Ms Toke Makinwa, Payporte Brand Ambassador and Media Personality and Mr Benjamin Amu, Head Social Media Business Strategy, Payporte during the media unveiling of the Payporte Brand Ambassadors, held last week in Lagos PHOTO: Kehinde Gbadamosi
We've diversified economy, says Okonjo-Iweala BY EDIRI EJOH & HOPE OFOBIKE
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inance Minister and Coordinating Minister of the Economy, Dr Ngozi Okojo- Iweala has said that the country’s economy has to a greater extent experienced development in other sectors of the economy. Addressing members of the business community in Lagos, she said the administration of President Jonathan had foreseen the need to develop other sectors of the economy long before the falling oil price and had invested in some areas over the years. She said: “We will talk about diversifying the economic. This is because the difficulties we are having on the economy and the oil and gas have been challenged with the nature of instability in the economy; therefore, diversification is the topic on everyone’s lips. “The President had foreseen that, what we needed to do in other to improve the country’s economy is to tap into all the sectors of the economy that were different and separate from the oil and gas. We would continue to tap oil and gas, but we would look at other sectors and develop them. The Minister said
that the government and Nigeria Bureau of Statistics found out that 1.8 million jobs are needed yearly to meet the needs of Nigerians, adding that currently the government is creating 1.2 million jobs yearly and needs the support of Nigerians to bridge the gap between the next three to four years. “Transformation agenda of the President actually means diversifying agenda. It has proven to be a very sound set of policies. We found that the economy is more diversified than we thought and therefore the policies that support the different sectors are sound policies. “We found that the services sector is much larger, and agriculture still remains important at 22 percent, services at 51 percent, industries at 26 percent. The creative sectors that are up-coming are at 1.4 percent. This means that our country is moving forward and therefore, the push to support agriculture, and see it as a main stem of the country’s economy, to grow above and stop importation, was the right one. “The move to encourage manufacturing, minerals to support the creative industries was the right one also, as well as the development of the housing sector.
transactions rose to N31.5 billion from N65.6 billion, Mobile payment transactions rose from N3.5 billion to N296.9 billion. CBN Governor, Mr. Godwin Emefiele however described the huge growth in electronic payment as a stepping stone, noting that, “There are still a great deal to be done”. He said the inauguration of the Payment System Strategy Board, Payment Scheme Boards and Initiatives Working Groups, is to further deepen the adoption of electronic payments in the country. He said that the Payment Systems Strategy Board(PSSB) is being put in place to provide strategic direction for the National Payments System. “ This body will replace the National Payment Systems Council (NPSC), and will be the pinnacle organisation for the governance, management and operation of the Nigerian Payment Systems. Its terms of reference (in addition to those outlined in the draft Payment Systems Management Bill) are majorly: To provide strategic direction and drive the overall National Payments System Strategy; To provide crossscheme priorities and resource allocation; To arbitrate in cross-scheme decisions. “The Board which shall be chaired by the Governor of the Central Bank of Nigeria, would have the following members: The Honourable Minister of the Ministry of Communication Technology, the Accountant General of the Federation, the four Deputy Governors of the Central Bank of Nigeria, the Chairmen of the four Payment Scheme Boards, independent Directors from the end-user community represented by the Director Generals, NACCIMA and Consumers Protection Council. Others are the Director Generals of the Securities and Exchange Commission (SEC) and the National Identity Management Commission (NIMC), the Chairmen of 2 subcommittees of the Banker ’s Committee (Payments Infrastructures and Financial Literacy subcommittees), the Executive Chairmen of the Nigerian Communication Commission and Federal Inland Revenue Service, the Permanent Secretary of the Ministry of Justice”.
Access Bank, bags Lagos tax compliance award BY EDIRI EJOH
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ccess Bank Plc has been recognised by the Lagos State Government for its 100 per cent tax compliance record. The Lagos State Governor, Babatunde Fashola, while presenting the award on behalf of the Lagos State Internal Revenue Service, LIRS, to Access Bank, emphasized the fact that tax payment is a defined and coexisting social contract between the government and the governed which should never be breached. According to him, the revenues generated from taxation have helped the state to fulfill its developmental roles to the people, adding that the state has built a tax system that works and which has helped sustain the state during the trying times brought about by the declining oil price. “The price of oil has dropped drastically. The federal allocations to the states have dropped. In spite of these, Lagos State has paid salaries regularly. We paid 15 per cent bonus in December because we created a model of public finance that works,” he said.
AfDB reiterates commitment to agricultural growth and transformation
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he African Development Bank (AfDB) has expressed its support to the African Union (AU) in implementing Africa’s commitments for an accelerated agricultural growth and transformation. Speaking at a high-level event during the 24 th AU Summit in Addis Ababa, AfDB Vice-President Aly AbouSabaa said the AfDB would bring, with other partners, an innovative financial support to the implementation of the AU Strategy and Roadmap for the realisation of 2014 Malabo commitments on agriculture and food security. Agriculture, he said, has been and continues to be important for the AfDB. It plays a key role in AfDB’s Strategy 2013-2022 in fostering an inclusive growth.
28 — Vanguard, MONDAY, FEBRUARY 2, 2015
Micro-Finance
Commodity Index Jan 23-Jan 29, 2015
Devaluation heralds tough times for businesses this year —KAPOOR Stories BY PROVIDENCE OBUH
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he Vice Chairman, Vital Products Plc, Mr. Sanjeeve Kapoor, penultimate week, said that 2015 is going to be tough for businesses as a result of naira devaluation, as this may result to market contraction of about 35 percent. He stated this in a chat with news men immediately after the company's closed door Annual General Meeting, for the financial year ended December 31, 2014, in Lagos. Kapoor noted that the cost of doing business in Nigeria has remained high. “I bring in tomato from Russia to Nigeria at $30 per ton and from Lagos to Kano it cost me $30 per ton, cost of transportation from Lagos to kano costs me the same thing from Russia to Nigeria," he said. “2014 was not too alright but 2015 is going to be tough because of the devaluation of the naira. Today naira to a dollar is N210 and we have not been able to move our prices up and so we will slow down our sales because we are having a lot of problem in increasing our prices," he added. He said: “I don’t think government can bring down the naira dollar price, unless oil goes up to $70 or $80. I see the market contracting by at least 35 percent in 2015, so volumes will come down, nobody should think big anymore and we will go from two shifts to one shift we have to lay off a lot people,” he said. He added that its business is established in the northern part of the country, “but we have not been so successful in Lagos. We have been improving our costing expenses and we have been cutting down cost. We run gas generated power which is cheap and even cheaper than NEPA.” Earlier in a statement, Chairman of
Board, Alhaji, Bashari Aminu, said that its operating environment remained undoubtedly marked by various economic, security and political challenges in the year under review. “The upsurge of insurgence in the country and the upcoming election has impacted negatively on business. “Going forward we
We run gas generated power which is cheap and even cheaper than NEPA will continue to build on existing competencies to enable us set the needed platform for continuous market expansion, volume growth and delivery of
•Sanjeeve Kapoor the desired benefits to all stakeholders. “We will continue to attract and retain the best talents in the industry. Our competitive strengths and growth potentials will be fully maximized, with the likes of Sudan and India and we will adopt a model for the backward integration project,” he said Meanwhile, the company ’s revenue stood at N4.213 billion for the year under focus compared to N4.452 billion in 2013.
Truck driver wins Airtel's Range Rover worth N30m
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commercial Truck Driver, Mr. Abiodun Adio, has emerged as grand prize winner of 2015 Range Rover Vogue worth N30 million at Airtel Nigeria’s Red Hot Promotion. The winner emerged weekend, in a raffle draw supervised by independent audit specialist, TCQA and conducted at the Airtel Corporate Head Office in Lagos. The Airtel Red Hot Promo, lasted for a period of 60 days and was open to all prepaid and Zero Credit limit post-paid customers. In her remark, Senior Manager, High Value Segment, Airtel, Mrs. Omoyeme Effiong, said that over 500 million records were entered for the promo where a participant is likely to record about 500 points. Effiong further highlighted that staff and families of independent contractor were not allowed to participate in the draw. However, 10 winners where electronically selected by the auditors and the customer confirmed with a valid detailed information with the Know Your Customer (KYC) emerged the grand prize winner. Also, Managing Director, TCQA, Associates, Mr. Wale Akingbade, added that its participation in auditing the draw was part of effort to ensure transparency and accuracy. To qualify, customers recharged their lines or purchase any Airtel data, Blackberry, Android bundle or voice offer bundle offer. Each of these activities carry specific number of entries into the raffle draw and the higher the number of entries earned, the higher the chances of winning. The accumulated entry points for a customer can be carried over every day throughout the promo so that the chance of winning increases with every passing day
Vanguard, MONDAY, FEBRUARY 2, 2015 — 29
Homes & Housing
•Construction of houses everywhere, how affordable?
NDIC begins liquidation of 21 mortgage banks By YINKA KOLAWOLE
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igeria Deposit I n s u r a n c e Corporation (NDIC) has liquidated 21 Primary Mortgage Banks (PMBs), following the revocation of their operating licences by the Central Bank of Nigeria (CBN). It would be recalled that CBN issued the revocation order of the 21 Primary Mortgage Banks (PMBs) as well as one microfinance bank via its gazettes dated November 14 and 19, 2014, and appointed NDIC the provisional liquidator to wind up affairs of the closed financial institutions. To this end, the NDIC has issued a public notice
announcing the closure of the financial institutions. The notice stated: “This is to inform Depositors, Creditors, Shareholders and the General Public that the operating licences of the under listed Twenty-One (21) Primary Mortgage Banks (PMBs) and One (1) Microfinance Bank have been revoked by the Central Bank of Nigeria (CBN) via gazettes dated 14th and 19th November, 2014 respectively and the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the provisional liquidator to wind up the affairs of the closed institutions. Consequently, the Nigeria Deposit Insurance Corporation has commenced
Kano commissions multibillion naira Kwankwasiyya City
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PMBs in Nigeria can create significant impact if only they adhere to recommended corporate governance practices
the process of orderly winding up of the affairs of the affected PMBs/MFB and will soon be making announcement/ publication on the verification and payment of insured deposits.” The corporation therefore called on stakeholders to contact the Director, Claims Resolution Department or any of the Corporation’s Zonal Offices for further enquiries and necessary assistance. At a workshop on ‘Credit Underwriting Standards for NDIC Examiners’ in Lagos, recently, NDIC Managing Director, Alhaji Umaru Ibrahim, confirmed the liquidation. He said available records showed that the PMBs’ Portfolio at Risk
averaged 45.70 percent, which is more than the prescribed 5 percent threshold. “In its bid to clean the system, on th 5 January, 2015, the CBN revoked the License of 21 PMBs and handed same to NDIC for Liquidation. Our attention is now being focused on the PMB sub-sector so as to address the emerging challenges, especially in Credit Underwriting Standards. PMBs in Nigeria can create significant impact if only they adhere to recommended corporate governance practices, based on effective and sustainable risk management practices as instituted by the Regulatory Authorities. In particular, PMBs should be interested in enhanced Credit Underwriting Standards because their loan portfolios are on a variable rate and therefore sensitive to Monetary Policy Rate (MPR) fluctuations,” he said. The list of affected institutions include: Alliance and General Mortgage Limited, Benhouse Building Society, Consolidated Estate Building Society, Cymon Savings and Loans, EuroBanc Savings and Loans, First Amalgamated Building Society, First Capital Savings and Loans, Global Building Society as well as Harvard Trust Savings and Loans. Others are Home Foundation Savings and Loans, Jubilee Building Society, Lagoon Homes Savings and Loans, Leverage Home Savings and Loans, Midland Mortgages, Mortgage PHB, MultiBlanc Savings and Loans, Mustard Seed Mortgage, Omega Savings and Loans, Password Savings and Loans, Post Service Savings and Loans, TMC Savings and Loans, as well as Crystal Edge Microfinance Bank.
ano State government has commissioned the multi-billion naira Kwankwasiyya city, one of the three mega cities being developed by the current administration in the state. The three cities, namely Kwankwasiyya, Amana and Bandirawo, estimated to gulp the sum of nearly N30 billion, were initiated to counter the challenges of shortage of housing, overcrowding, overstretching of public infrastructure and related problems, caused by rapid urban growth of Kano metropolis. Realizing these problems and their attendant consequences, the state government, in 2012, conceptualized what it termed “the Kano Mega City project” which entailed constructing the new capital intensive cities among other infrastructure, established the Kano Geographic Information Systems, KANGIS, and banned the demarcation and sales of illegal sub-divisions
of plots popularly known as Awon Igiya. Gov. Rabiu Kwankwaso explained that the first phase of the Kwankwasiyya Housing project covers 205 hectares with 698, consisting 5 and 4 bedroom duplexes as well as 3 bedroom bungalows. “Government resources were solely used to build these houses and we have sold some while others are being sold to Kano citizens and other Nigerians,” he said. The governor said a Chinese company has acquired 250 houses and 41 hectares of land at Amana city, at the cost of about N5 billion, payable within three months, adding that from all indications, all the houses at the three new cities would be sold by May, 2015. He, therefore, assured that the proceeds generated from the sale of the houses would be channeled to the provision of infrastructure in other layouts like Kuyan Ta’inna, a suburb of Kano city, in the last few months of his administration.
NIESV lauds LASG over land transaction cost slash
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igerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State branch, has commended the Lagos State government over the reduction in the cost of land transactions in the state. The commendation was made at a press conference addressed by NIESV chairman, Stephen Jagun. “We appreciate the listening ear of the Governor, Mr. Babatunde Raji Fashola, and his Cabinet for the assiduous work they have done in yielding to the advice by our noble institution. He has been able to reduce the cost of transaction from 13 per cent to three per cent. It is an achievement that the government needs to be applauded for, although it can be improved upon. In October 2012, a position was presented by the President of our institution and several meetings were held thereafter with the Commissioner and other senior government officials. We believe that this culminated into the results we have today. “The government action would provide more liquidity in the property market thereby generating more revenue for the state government.
US mortgage rates inch up
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ixed mortgage rates in the US last week rose for the first time in 2015, with Freddie Mac’s widely watched survey pegging the 30-year conventional rate at 3.66 percent, up from 3.63 percent. The average rate for a 15-year fixed home loan was 2.98 percent, up from 2.93 percent. Start rates for adjustable loans rose as well, Freddie Mac said. The average monthly rate for a 30-year conventional mortgage had been 4 percent or higher for 18 months before dropping below that threshold in December. This boon for borrowers was triggered by powerful global demand for safe securities denominated in strong U.S. dollars. That has pushed down the yields, or effective interest rates, on Treasury and mortgage securities, and mortgage rates have followed. Freddie Mac asks lenders each Monday through Wednesday about the terms they are offering on mortgages of up to $417,000 that can be backed by Freddie and Fannie Mae, its sibling mortgage finance company. C M Y K
30 — Vanguard, MONDAY, FEBRUARY 2, 2015
E-Commerce Letter delivery is declining but we are seeing an increase in parcel and goods delivery
Google to change privacy policy
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earch engine Google has agreed to better inform users about how it handles their personal information after an investigation by Britain’s data protection regulator found its privacy policy was too vague. The Information Commissioner ’s Office said in a statement that it required Google to sign a “formal undertaking” that it would make the changes by June 30 and take further steps in the next two years. The ICO investigation stems from a privacy policy implemented by Google in March 2012 that consolidated some 70 existing privacy policies into one and pooled data collected on individual users across its services, including YouTube, Gmail and its social network Google+. Regulators in Spain and France have fined Google 900,000 euros ($1.02 million) and 150,000 euros respectively over the privacy policy, small penalties relative to Google’s scale.
Visa reports profit boost
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isa Inc, the world’s largest credit and debit card company, reported a better-thanexpected quarterly profit on last week due to a good holiday season and a strengthening U.S. job market that encouraged people to spend. The company said ecommerce, which mainly uses cards, was “extraordinarily strong during the holiday season.” But Chief Executive Charlie Scharf said consumer spending on the whole, while at “ reasonable” levels, was not accelerating. Shares of the company, which also announced a 4for-1 split of its class A common stock, rose about 4 percent in extended trading. Visa, which earns money from both the volume and value of transactions using its cards, said total volume increased to $1.90 trillion from $1.84 trillion.
LAUNCH - From left: Minister of Industry, Trade and Investment, Dr. Olusegun Aganga; Managing Director, Coca-Cola Nigeria Limited, Mr. Adeola Adetunji; Group Managing Director, Diamond Bank, Uzoma Dozie; and Director, Enterprise Development Centre (EDC) Mr. Peter Bamkole; during the launch of the Enterprise Development Centre's new building at Pan Atlantic University, Lagos on Thursday 29th of January, 2015.
Courier firms must reposition to key into e-commerce — Johnson STORIES BY JONAH NWOKPOKU
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he Minister of Communications Technology, Mrs. Omobola Johnson has said that courier companies in Nigeria must reposition and re-strategise to meet the growing demands of parcel delivery being driven by the boom in e-commerce in Nigeria. She said there is no need for e-commerce companies to create separate logistics for
delivery if the courier companies in the country can create a value proposition that appeals to and meets the demands of these ecommerce firms. “The courier companies must have a value proposition for these companies because the opportunity is there. Letter delivery is declining but we are seeing an increase in parcel and goods delivery,” she said. Johnson who was speaking at the Information and
Communications Technology, ICT stakeholders’ forum in Lagos also disclosed that since 2011, the ministry has been making significant efforts to reform the Nigeria Postal Service, NIPOST to boost the economic value of the agency and the Post and Courier Services sector. She noted that the revised Gross Domestic Product, GDP figure showed that the sector ’s contribution at 0.03 percent was low but that “the sector is however growing steadily,
and is likely to experience more rapid growth as ecommerce expands.” The minister who also presented her score card to the forum said part of the Ministry’s achievement in the last four years was the creation of the Technology Intervention Fund, an innovative intervention Fund which she said, closed at $16.2 million last year and “further rounds will aim to reach target of $50 Million. According to her, the Fund will among other things: “help to grow the still very nascent Venture Capital industry in Nigeria and will fill the gap that exists where high risk capital is needed by entrepreneurs; target disruptive and innovative technology start-ups in Nigeria that have the potential to grow to become category leaders and create opportunities currently unavailable to the ever growing ecosystem of young Nigerian IT entrepreneurs.”
Naira devaluation: ‘No significant impact on e-commerce yet’
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he Managing Director of Nigeria’s premier online marketplace, Kaymu.com, Evangline Wile has said that the current depreciation of the Nation’s currency, the Naira has not had any significant impact on e-commerce. She stated this while speaking to Vanguard on the sideline of a media brunch organised by the Marketplace to mark its second anniversary in Lagos. She said although an impact may be expected; it will not be significant as operators in the sector especially merchants on Kaymu marketplace had anticipated the trend and made contingency plans. “Certainly there should be an impact but we don’t expect it to be over a long period, for example over a year. Right now, this situation has not had any impact on our merchants because lots of our merchants had anticipated what is happening and
planned for it and also because we are just coming from the Christmas period when importers over-exported and there is still a reasonable stock that will last until the situation stabilises,” she said. “I think our merchants see it as short term issue. I think our expectation is that after the elections that it will go back up. And even other major currencies will stabilise. I think most of our merchants had anticipated that this will happen for this short period of time and so they have made contingency plans. So I don’t expect the continuous decline in the naira’s value to have any significant impact in the long term. I think it will be short term thing and probably be over in the next quarter,” she added. She however noted: “Even if after the elections and the Naira continues to fall, I still think that it will not have significant negative impact on e-commerce because Nigeria is not the only country in the
world where there are currency fluctuations. There are lots of ways to deal with it and a lot of merchants are savvy enough to be able to deal with it.” On what Kaymu has accomplished in the past two years, she said they have
Even if after the elections and the Naira continues to fall, I still think that it will not have significant negative impact on ecommerce
been able to attract over ten thousand merchants to the Kaymu marketplace even as it has expanded to six other cities in Nigeria and 34 other countries all over the world. She said Kaymu will continue to expand through strategic marketing to achieve its vision which is to bring all Nigerian merchants online. Also speaking, Kaymu’s Head of Marketing Communications, Tomiwa Oladele told journalists that the online marketplace has continued to provide premium exposure for merchants who sell on Kaymu website through promotion on different platforms including Google, Facebook, and offline including customer services and logistics support at no cost. She noted that Kaymu is concentrating on expanding its merchant base and therefore offers free services to all merchants who enlist and sell on the Kaymu platform.
Vanguard, MONDAY, FEBRUARY 2, 2015 — 31
Insurance
Insurance commissioners and efforts to revamp the sector BY ROSEMARY ONUOHA
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he insurance industry in Nigeria is working hard to take its rightful place in the economy; as a result, all efforts are geared towards making the industry contribute meaningfully to the Gross Domestic Product (GDP) of the country. Nigeria’s gross premium per capita of $8.9 is low when compared to $1,072, $29.9 and $49.3 for South Africa, Kenya and Ghana, respectively. Insurance penetration as a percentage of GDP is 0.43 per cent; and only an estimated 6 per cent of the population has any form of insurance. Before 1992, the insurance industry was being supervised by the National Insurance Supervisory Board. Initially, the industry was being supervised by the Insurance Department in the Federal Ministry of Trade, headed by the Registrar of Insurance. And from inception, NAICOM has been reporting to the Federal Ministry of Finance. This is quite unlike other regulators in the country’s finance market including the apex bank, Central Bank of Nigeria and the 10 years old National Pension Commission (PenCom). In recognition of this challenge, the four insurance Commissioners that the country had have worked hard and recorded several positives in raising the stakes of the industry. It is therefore pertinent that the tenures of all commissioners be reviewed here. Okwor Chief Eugene Okwor, who was appointed as Registrar of Insurance, Federal Ministry of Trade, Lagos in 1974 and later appointed
LAUNCH - From left: Assistant Secretary, Steps to Greatness Foundation, Abimbola Okodabi; Chairman, Mr. Ayodele Ifaturoti and Managing Director/CEO of the Foundation, Mrs. Oluseyi Ifaturoti, during the media launch of the foundation in Lagos. Director of Insurance in 1977, became the pioneer Commissioner for Insurance, National Insurance Supervisory Board, and the body which metamorphosed into the National Insurance Commission (NAICOM). He served in this capacity from 1993 to 1997 when he voluntarily retired. In this capacity Okwor supervised the carving out of the Insurance Department at the Federal Ministry of Finance and subsequently establishing the National Insurance Commission (NAICOM) as the regulator for insurance industry. Bailey The seven and half years tenure of Chief Oladipo Bailey was spent mostly tearing down bad structural defects and
setting up new structures that formed the bedrock of what achievements that the insurance industry has recorded in the last 10 years. At different times, Bailey confronted recalcitrant operators, particularly the insurance brokers’ fraternity that held other operators hostage and would not want any interference from any regulator who want the situation changed. The greatest achievement of Bailey was the protection of the insurance industry from predation by banks and other hawks in the finance sector. He warned and lobbied government to stop banks, under the guise of universal banking, from taking over insurance business, warning that it would cause serious crisis in the economy. Universal banking policy was introduced
to enable financial institutions to provide all classes of financial services under one platform, with the insurance industry as the target. His agitation has been rewarded with the reversal of universal banking by the Central Bank a few years back. Bailey also supervised the upward review of the capital base of insurance companies as prescribed by the Insurance Act, 1997; from N20 million, N50 million for life and special risks business to N150 million, N200 million respectively. The capital base for composite and reinsurance companies were raised from N90 million to N350 million at the same time. This inadequacy in this capitalisation led to its upward review during the tenure of his successor. Chukwulozie Chukwulozie supervised the last recapitalisation exercise in the industry, when in 1997, the Federal Government mandated reinsurance companies to raise their capital base from N350 million to N10 billion, while life and general insurers were asked to raise theirs from N150 million to N2 billion and N200 million to N3 billion respectively. At the end of the exercise, the capital base of the industry was raised from a paltry N2 billion or thereabout to over N200 billion. The capacity of the industry to take on high ticket risks, meet claims obligations and train its workforce improved significantly at the end of this exercise.
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34 —Vanguard, MONDAY, FEBRUARY 2, 2015
Banking & Finance BY BABAJIDE KOMOLAFE
Ecobank Nigeria donates to Army PR School
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he Nigerian Army School of Public Relations and Information has commended Ecobank Nigeria donation of N2.5 million towards the completion of a building project at the Nigerian Army School of Public Relations and Information. Captain Musa Yahaya of Nigerian Army School of Public Relations and Information, who extoled the bank’s support, stated that the monetary donation would go a long way, enabling the school achieve its long term desire to expand its infrastructure to accommodate more students. He lauded Ecobank’s willingness to support communities where it operates, urging other corporate organizations to emulate the bank. In his remarks Deputy Managing Director, Ecobank, Tony Okpanachi, said the bank has a history of giving back to the communities where it operates. He stated that the donations would go a long way to assisting Army authority complete its school building project.
Enterprise Bank begins Moneygram “Naija Send”
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n the continuous bid to serve her customers better, Enterprise Bank Limited has commenced MoneyGram “Naija Send” – Outbound money transfer services from Nigeria with MoneyGram International. MoneyGram “Naija Sends” enables walk-in and existing customers enjoy the opportunity of sending money abroad on the MoneyGram International platform. The product is designed for everybody, and has proven to be a convenient means of meeting personal financial needs. Such needs include payment of school fees, pocket money and other educational expenses (for parents who have children schooling abroad). Under this service, money is sent in naira but received in the currency of the receiving country. This eliminates the risk attached to carrying physical cash in transit while travelling abroad. For additional security, money sent from Nigeria cannot be received in Nigeria. C M Y K
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he Central Bank of Nigeria (CBN) has said that the introduction of electronic collection of revenue (e-Collection) by the federal government will help to curb revenue related corrupt practices in the country. Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, stated this at a sensitisation workshop for banks of Federal Government e-Collection on CBN Payment Gateway. The workshop was organised by SystemSpecs Limited, an indigenous software development company and owners of the Remita electronic payment platform, which is used for the e-Collection of revenue. Speaking on e-Collection in a Cashless Society, Fatokun said, “He said, “The whole world is moving into a cashless mode and Nigeria cannot be an exemption. The e-Collection will avert a larger proportion of revenue theft, diversion of collected revenue and all sorts of corrupt practices associated with revenue collection. “We must not be deterred by these routine challenges of infrastructural deficiencies or fraud (especially electronic/ card fraud) that come up, because ultimately the potential benefits of going cashless outweigh the challenges. “The policy involves a culture change, which will
PRESENTATION - From left: Mr. Abubakar Suleiman, Executive Director, Finance & Strategy, Sterling Bank Plc; Lagos State Commissioner of Police, Kayode Aderainti and Chief Security Officer, Sterling Bank Plc, Mr. Igba Austin Iwar at the presentation of vehicles and other security equipment by Sterling the Bank to the Lagos State Police Command at the weekend
E-collection to curb revenue related corrupt practices—CBN naturally take some time to gain acceptance. Nevertheless, with support of all the stakeholders, Cash-less Policy is being accomplished”. The e-Collection of revenue is part of the Treasury Single Account (TSA) initiative,
under which all monies belonging to the government are domicile in one account with the Central Bank of Nigeria, with payments out and collection into the account is done via an electronic payment platform. “E-Collection is the flip side
Congo Cenbank okays FirstBank's acquisition of BIC
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entral Bank of Congo (BCC) has approved the acquisition of Banque Internationale de Credit (BIC) by First Bank of Nigeria Limited. FirstBank of Nigeria Limited had acquired 75 percent equity interest in BIC in 2011, as part of its regional expansion efforts. Announcing the approval in a statement on Friday, FirstBank said that name of BIC has subsequently being changed to FBNBank DR Congo The Bank said, “Following the recent approval by Central Bank of Congo (BCC), the Banque Internationale de Credit has now become FBNBank DR Congo, a subsidiary of First Bank of Nigeria Limited. FBNBank DR Congo is strategically positioned to foster greater collaboration and provide better service for the country’s public and private sector clients, and the general public at large. “The launch further consolidates FirstBank’s position as the largest corporate and retail banking financial institution in subSaharan Africa (excluding South Africa) with presence in Ghana, Guinea, Gambia and
Senegal as well as presence in the UK and representatives offices in Johannesburg, Paris, Abu Dhabi and Beijing, China. The expansion represents FirstBank’s strategic objective to maintain significant market share, expand its pan-African footprint and diversify earnings while delivering value to shareholders. With over 35 branches in DRC, FBNBank DR Congo leverages FBN’s international network, business expertise, which is part of the diversified synergies of the FBN Group
We are committed to developing a multi-local business model that broadens our geographic revenue base
to offer innovative, convenient and secure banking services to its customers and better seize the emerging opportunities of the market” Speaking on this development, the Group Managing Director/Chief Executive of FirstBank, Bisi Onasanya, said: “The launch of FBNBank DR Congo fulfills one of the critical stages of our ambition to steadily broaden and build a more diverse footprint across Africa. We are committed to developing a multi-local business model that broadens our geographic revenue base while providing enhanced service delivery to our new customers and equity participation to local investors.” “Commenting further, the Managing Director, FBNBank DR Congo Cheikh-Tidiane N’Diaye said “Having built value for Nigeria over the last 120 years, FBNBank DR Congo is poised to do even more in the DR Congo financial markets. FBNBank DR Congo will provide customers with a bouquet of banking solutions that make their financial lives less cumbersome and stressful whilst providing a delightful service experience.
of e-payment. Outflows from the TSA are currently made through e-payment, while inflows are largely manual,” said Mr. Jarad Sosarumso, Deputy Director, Revenue and Investment, Office of the Accountant General of the Federation (OGF). “E-collection completes the cycle of processing government transactions electronically”, he said Sosarumso, who represented the Accountant General of the Federation, said that the present system of manual collection of revenue is bedevilled with various problems including: Poor tracking of internally generated revenue ( IGR) and other collection; Leakages of government revenue and other inflows; Non remittance of revenue by collecting entities; Misappropriation of revenue and other collections; and Inadequate, or sometimes, out-right lack of records” He said the new eCollection among other things is designed: To plug loopholes in the FGN revenue collection system; Enthrone a new regime of transparent and accountable IGR management; and also to improve available funds for funding developmental programs”. He noted that in addition to these, the introduction of e-Collection aligns with the on-going CBN e-payment policy; Ease the burden of revenue payers; Make government contracts more accessible to the people; and create a mutually rewarding relationship with collecting banks”
Vanguard, MONDAY, FEBRUARY 2, 2015 — 35
AVIATION
Why aircraft land with difficulty at Nigerian airports — NATCA By LAWANI MIKAIRU
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he Nigerian Air T r a f f i c C o n t r o l l e r s Association, NATCA, has said most aircraft find it difficult to land at airports across the country during adverse weather conditions such as dust haze, rain and fog because of inadequate
instrument landing systems . According to NATCA G e n e r a l S e c r e t a r y, Mr. Olawode Banji “Nigerian airports do not have some categories of instrument landing systems (ILSs) that would enable aircraft to land at airports under severe weather condition and zero
visibility.” He added that many of the landing aids such as ILS, airfield lightings (AFLs) and others are inadequate thereby making it difficult for airlines to operate in adverse weather conditions. “Some adverse weather conditions that are associated with harmattan season
include mist, fog and dust haze. All these reduce visibility and could limit the usage of an airport or impair air safety. Many of the landing aids such as ILS, airfield lightings ( r u n w a y, a p p r o a c h and taxiway lights) are inadequate at our airports thereby limiting operations in adverse weather condition like dust haze, rain and fog. Many of the airports
operations are restricted under adverse weather conditions due to absence of airfield lightings and nonavailability of desirable landing aids,” he said. Banji also said some airports that are equipped with instrument landing aids had been battling with power and technical challenges. “Some airports with ILS are always having problems of power supply to the equipment and other
technical problems that could make the e q u i p m e n t unserviceable. The categories of the available ILS and nonavailability of airfield lightings do not allow for aircraft operations when the visibility reduces below some set minima for each airport. There are categories of ILS that are not available at Nigerian airports to allow for landing under severely reduced visibility even as low as zero visibility,” Banji said.
We spent N2b to upgrade facilities at MMA2 — Bi-Courtney By LAWANI MIKAIRU & DANIEL ETEGHE
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i-courtney Aviation Services Limited , operator of Murtala Muhammed Airport Domestic Terminal 2, MMA2, has disclosed that the company has spent about N2billion to upgrade facilities in the terminal building. Head, Corporate Communications, BiCourtney Aviation Services Limited Mr. Remi Ladigbolu revealed that in the last one year the company has focused its attention on upgrading facilities at the airport’s terminal adding that such move was meant to bring comfort and make travelling convenient for the passengers. Mr. Ladigbolu noted that facilities that were upgraded were done in line with what was obtainable at various international airports across the world. He enumerated facilities that were upgraded to include: the upgrading of the escalators, panoramic lift, the Cupps system, automation of the first MSCP in Lagos, upgrade of generating plants, instalment of egates, Baggage Reconciliation System, UPSs, and Baggage Screening Machines, he said that such achievement was what the company is celebrating today. C M Y K
C M Y
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Business & Economy
From right: Nigeria Opportunities Industrialisation Centres, ( NOIC ) National Board Chairman, Archbishop Magnus Adeyemi Atilade, Senior Special Assistant on Christianity to the Governor of Lagos State, Rev. Funmi AkitoyeBraimoh, and Former Deputy National Executive Director, NOIC, Evang. Bunmi Olusola-Kupoluyi at the just concluded 2nd batch bi-weekly graduation ceremony of the NOIC/EARN programme sponsored by Walmart's Foundation from USA.
NIDF to pay N25m coupons to note holders
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he Nigerian International Debt Fund (NIDF) , a Nigerian Stock Exchange, NSE, listed Mutual Fund plans to pay a minimum of N40.00 per note holder as final coupon to investors for the year ending December 31, 2014. A total of N25.2 million will be distributed amongst note holders on the register of the fund as at the closure date of February 5, 2015. According to Ola Belgore, Managing Director of Afrinvest Asset Management Limited, the Fund Manager, this is the 34th coupon in the life of the Fund since its launch in 1997, and the final distribution is in line with the structure of the NIDF, as the Fund is designed to pay distributions twice a year. In his words, “NIDF paid an interim coupon of N60.71 per note in August 2014 and with an estimated N40.00 per note to be paid on February 11, 2015, the total payment for the 2014 financial year stands at N100.71.” “The Fund closed the year at a price of N1, 978.31 per note achieving a N68.51 capital gain over the opening price for 2014. At the trading price of N1987.26 on Wednesday, January 21, 2015, the coupon yield was 5.1 percent”, Belgore added. The Nigeria
International Debt Fund invests in the domestic and international debt instruments of the Federal Government of Nigeria as well as those of the 36 States. NIDF offers investors s a f e t y, capital preservation, steady returns, diversification and value, and has a consistent dividend history, making it quite attractive for both individual and
institutional investors such as Pension Fund Administrators (PFAs), insurance companies, asset managers and gratuity funds. Only recently, the NIDF was rated “A-” by Global Credit Rating Company (GCR). This rating by one of the leading global rating agencies is among the best for mutual funds in the market today.
Securities Africa unveils Real Trade, assures of adequate security
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n its determination to boost the Nigeria capital market, Securities Africa Financial, SAF Limited, a dealing member of the Nigerian Stock Exchange, NSE, has introduced a new product, “Real Trade” and has assured stakeholders that their transactions on the platform are adequately protected. Speaking to newsmen in Lagos, the Managing Director, Securities Africa Financial, Mr. Afolabi Folayan, said “Real Trade is our online/electronic trading product designed to offer convenience to the investing public through our e-Business Suite. This new product is borne out of the need to satisfy the cravings of certain group of investors. They are: The IT Savvy; those that believe that the best way to get anything done is to do it yourself; those that want minimal interactions with human personnel by serving themselves on a trading platform; those that want to take and execute their investment decisions from the comfort of their desks/homes/ mobile devices; the young investors, starters and students.” He further explained that to subscribe to the Real Trade platform, investors need to have access to internet, either through their phones, laptops, computers or ipads etc. He stated that Real Trade features include: Convenience. Investors have opportunity to trade directly through straight processing to NSE; trade for yourself/ Self Serving platform (put you in the driver ’s seat); instant confirmation of successful trades/feedback; direct access to stockbroking accounts, portfolio position; direct access real time market information and access to research materials. C M Y K
38 — Vanguard, MONDAY, FEBRUARY 2, 2015
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40 — Vanguard, MONDAY, FEBRUARY 2, 2015
Tax Matters
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i) The Self- Assessment Regime requires the concurrent filing of tax returns and payment of tax due on or before the due date. (ii) A taxpayer must compute his/her tax liabilities, pay the tax/taxes due and file the relevant returns with evidence of payment of the tax/taxes on or before the due date. (iii) The relevant tax authority, FIRS shall accept all tax returns submitted by the taxpayer. The Tax Authority shall carry out necessary checks to ensure that all required information have been appropriately entered into the tax return forms. (iv)Failure by a taxpayer to submit the tax returns forms on or before the due date is a breach of these Regulations and the Taxpayer shall be liable to pay such fines together with interests as may be prescribed in these Regulations or under the relevant provisions of the applicable tax laws. FORMS FOR FILING TAX RETURNS For the purpose of filing of tax returns required under the tax laws listed above: (a) In the case of the Personal Income Tax Act and other taxes on individuals, the tax return forms shall be as may be prescribed by the Board of FIRS; (b) In the case of taxes on companies, the tax return forms shall be as may be prescribed by the Board of FIRS; (c) In the case of the tax return forms required under the Value Added Tax Act, the forms shall be as may be prescribed by the Board of FIRS; (d) In the case of all other taxes not covered by paragraphs (a) – (c) of these Regulations, the tax return forms shall be authorized by the relevant tax authorities responsible for the collection of such taxes. MODE OF FILING RETURNS (i) A taxpayer must file tax returns under the SelfAssessment Regime in person or engage the services of accredited Agents to file returns on his behalf. (ii) For an Agent to carry out the services required under this Regulation, the Agent must be fully certified by any one of the under listed Bodies: • The Association of National Accountants of Nigeria; • The Chartered Institute of Taxation of Nigeria; and • The Institute of Chartered Accountants of Nigeria. (iii) For the Agent to render the services under this Regulation, the Agent must have the accompanying seals of any of the Bodies listed in (ii) above. SIGNING OF FORMS WHERE AGENT IS C M Y K
Filing returns based on self assessment regime ENGAGED BY THE TAXPAYER: Where an Agent has been engaged by a taxpayer for the purpose of filing of tax returns: (i) In the case of filing returns for Personal Income Tax Act, the forms must be signed by the taxpayer in person; (ii) In the filing of returns under the Companies Income Tax Act, the forms must be signed by a Director or the Company Secretary. (iii) In either (i) or (ii), the Agent shall sign alongside any of the signatories mentioned in (i) and (ii) above. LISTING AND DELISTING OF AGENTS BY RELEVANT TAX AUTHORITY: The FIRS in the exercise of its responsibilities under these Regulations may: (i) Compile annually a list of agents upon being satisfied that they are knowledgeable in the provisions of the applicable tax law, rules and regulations; and (ii) Remove from such list, in consultation with the relevant professional body, any agent who fails to satisfy the standards referred to in these Regulations. TIME FOR FILING RETURNS: 1. For Personal Income Tax Act- The due date for the filing of self- assessment returns under the Personal Income Tax Act shall be on or before the 31st day of March of every year. 2. For Companies Income Tax Act- The tax due for filing selfassessment returns under the Companies Income Tax Act shall be six months from the end of the accounting year; 3. For Petroleum Profits Tax Act- Under the Petroleum Profit Tax Act, a company shall file a return of its estimated tax for an accounting period within two months after the commencement of each accounting period while instalment payment shall commence not later than the third month of the accounting period and the final return shall be filed within five months after the end of the accounting period with evidence of payment of the final instalment. 4. For Value Added Tax ActTaxable persons and agents of Ministries, Departments and Agencies of government subject to Value Added Tax (VAT) shall render a return of activities of the preceding month and remit VAT due on or before the 21st day of the month after the month of
Kabir Mashi, Chairman, FIRS
transaction with evidence of payment. EXTENSION OF TIME FOR MAKING RETURNS: (1) For the purpose of filing income tax returns, a taxpayer may apply in writing to the Board of the FIRS for an extension of time within which to file returns provided the taxpayer: a. Makes the application before the due date of filing returns; and b. Shows good cause of its inability to comply. (2) The Board may in writing grant the extension of time for making returns to such time as it may consider appropriate. CONDITIONS FOR GRANTING EXTENSION OF TIME FOR MAKING RETURNS:
Administrative Assessment shall include penalties and interests imposed as part of the liability due, effective from the time the returns became due
(1) In granting any extension, the Board of the FIRS shall take the following into consideration: a. in the case of an individual taxpayer, on the death of the taxpayer within the period of filing of the returns; b. in the case of a company, on the death of any principal officer of the company, such as the Chairman, Managing Director or Company Secretary, within the period of filing of the returns; and c. Where the company experienced a fire or natural disaster within the period of filing. (2) The company must provide verifiable evidence of the fire or natural disaster or of the death of the principal officer of the company. CONSEQUENCE OF LATE FILING UNDER THE PERIOD OF EXTENSION: Where an extension is granted, any late filing outside the period of extension whether accompanied by payment of tax due or not shall be penalized for late filing under these Regulations. APPROVAL TO EXTEND TIME NOT TO ALTER TIME FOR PAYMENT OF TAXES: Any approval granted by the Board of the FIRS under 14 of these Regulations shall not be construed as to alter the time within which payment of taxes shall be made under any applicable tax law provision.
The filing of returns for VAT is excluded from this extension. INSTALLMENT PAYMENTS OF TAX: (1) A taxpayer may make instalment payments of tax due by commencing payment in the relevant year of assessment in a manner that the final instalment payment shall be made not later than the due date provided that: (a) The taxpayer notifies the FIRS of his intention to make instalment payments; and (b) The taxpayer files returns on or before the due date with evidence of payment of the final Instalment. (c) The FIRS shall not approve more than three instalment payments from the due date. (d) The payment of VAT is excluded from instalment payments. PAYMENT OF TAX DUE Where a tax falls due and is not paid under any enactment by any person from whom it is due, whether or not the payment of such tax is secured by a bond, the tax due shall be paid on demand by the FIRS or by delivering the demand notice in writing to his place of abode or business or through his agent, registered post or approved courier service. A D M I N I S T R AT I V E ASSESSMENT FOR FAILURE TO FILE RETURNS: (1) For the purpose of this Regulation the term “Administrative Assessment” means an assessment raised by the Board of FIRS where a taxpayer has failed to file returns and pay taxes due on or before the due date or where there is an understatement of tax in the returns filed. A D M I N I S T R AT I V E ASSESSMENT NOT TO RELIEVE A TAXPAYER FROM OBLIGATION TO FILE RETURNS A determination of the tax payable through Administrative Assessment shall not relieve taxpayers from the obligation to file tax returns of their businesses, in the case of a company or full disclosure of income from all sources in the case of an individual. Administrative Assessment shall include penalties and interests imposed as part of the liability due, effective from the time the returns became due. FAILURE TO FILE RETURNS AFTER EXTENSION OF TIME Where a taxpayer, agent or employer fails to file the tax returns for an accounting period after the time extended by the Service, the taxpayer, agent or employer shall be liable to pay prescribed penalties for late filing of returns from the due date of filing.
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C M Y K
42 — Vanguard, MONDAY, FEBRUARY 2, 2015
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Advertising Stories by PRINCEWILL EKWUJURU
Diageo boosts distributors' marketing profile
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uring the invention of television in the 1940s, advertising became one of its many inceptions. Many homes adopted regular television-watching as a habit, programming on television also became more clever. Advertisements then became strategically placed between television show segments. In some cases, the television show itself acted as an advertisement. Over the years, television commercials became high quality mini-productions many viewers sit through between their favorite shows. These traditional advertisements which run 15 to 30 seconds, eat part of a program’s airtime. According to Ad Age, an international online journal, ads have become increasingly targeted rather than catering for everyone. Apart from pushing for a product with its constant airing and re-airing, a traditional television commercial can also be entertaining and sometimes tells a story or makes a song popular. According to the Motley Fool, a multimedia financialservices company, many companies, particularly those involved with selling a consumer item, make use of product placement as its marketing tool. Automobile companies or food companies employ this method a lot, as seen in many television programs. Without even mentioning the item, scenes where the characters of the show are either driving a car or eating out of a cereal box have the company ’s veryvisible logo on the product. The result can create a strong, identifiable image, just like present day political ads. Most commonly applicable to the government or its
A product is developed into a brand through a professional process that endears the product to loyal consumers and enables it to connect with prospects
By PRINCEWILL EKWUJURU
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LAUNCH - From Left:Brand Building Director Foods, Mrs Nsima Ogedi-Alakwe, Category Manager Oral care, Oiza Gyang; Musical Artist, David Adeleke (aka) Davido, Brand Building Director, Unilever Nigeria Plc, Mr. David Okeme; Musical Artist, Yemi Alade; and Communications Channel Manager, West Africa, Unilever Plc, Mr. Adenugba Diran, at the media launch of Close up cupids game in Lagos recently.
TV commercial as political weapon zAmbode, Agbaje, others deploy theme songs projects, a political advertisement may also be the method used by human interest groups, the academia, religious groups and even corporations, as a way to convince the audience or sway them into their own ideals, systems and beliefs. According to a research paper by Won Ho Chang and others, political ads come
about when there are important issues to be decided upon by the general public. However, successful marketers understand that a product is developed into a brand through a professional process that endears the product to loyal consumers and enables it to connect with prospects. Not surprisingly, this applies to product as well
as personality brands. With the 2015 general elections at hand, the people are beginning to find it increasingly difficult to differentiate between the noise in the political space and the truth, as each politician or political group vies to shout the loudest in a bid to get the most attention.
Of bitters and Kasapreko’s quest to deepen consumers knowledge
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ompetition they say is good for business, but when the hand of Esau is visible in the affairs of Jacob then there is every tendency for brand owners to be skeptical of the happenings in the market. Quite recently, after the launch of Kasapreko’s Alomo bitters into the Nigeria market its success attracted barrage of other bitters like Baby-Oku, Orijin, ‘Osomo,’ ‘Yoyo,’ ‘Koboko,’ ‘Kerewa’ and the latest entrant, Swagga bitters amongst others. All in a combined effort has stiffened competition in the market which ‘Alomo’ owners don’t see as a problem. Obviously privy of the dangers of adulteration, Kasapreko’s Alomo is making frantic efforts to stay on top, thus inducing an education on dangers of consuming adulterated bitters. This practice of adulteration has not gone unnoticed, as genuine manufacturers discovered that their finances had dropped as a result of influx of adulterated or faked bitters. To stem the adulteration trend, Kasapreko took time out to educate consumers on the dangers of consuming adulterated bitter brands with a marketing activation intended to deepen consumer consciousness about their wellness and safety by encouraging them to make healthier choices in things they eat and drink amidst the euphoria of the yuletide.
The company capitalized on the occasion of the Christmas new year celebration to roll out a weeklong marketing initiative to boost consumer knowledge of the ‘Alomo’ Bitters brand. To this end, an activation truck and a team of Brand Ambassadors were deployed to strategic touchpoints in the city of Lagos to educate consumers on the safety features of ‘Alomo’ Bitters as distinct from the imitated version and other bitter brands in the market. For days, the ambassadors moved from social events to street carnivals and jams, market areas and neighbourhoods to drive the brand’s key message as the “authentic African herbal bitters.” The ambassadors also distribute flyers which contain vital product information. Radio hypes anchored by popular on Airpersonalities and a television commercial, are also running on select city stations to ensure consumers are equipped with adequate information they require on the brand need of ‘Alomo’ Bitters, thereby safeguarding them from harmful imitated products in the market. According to officials of the company, the rationale for the initiative is that as Nigerians shop and catch fun of yuletide, they could also be assisted in making healthy choices while they also get some incentives for their loyalty to the brand over the years.
iageo, parent company of Guinness Nigeria Plc, owners of the Baileys Irish cream said its increasing its distributors' marketing profile with a car and three generating sets. The gift winners who emerged through a raffle draw had the following trade partners emerging winners Mr. Ikechukwu Nnamani of McVic Ventures Limited, won a KIA Mohave Jeep 2015 Emeka Ezeabata and Uche Domeli won 4.5 KVA generators respectively in the 5th edition of the monthly reward system. The company said its doing this to make the distributors feel the impact of the company on their businesses as a way of rewarding them for their patronage for 2014 December sales period. Udjoh Ufuoma, Baileys Brand Manager, Diageo Brands Nigeria, said that its brands, including Baileys, is able to maintain its number one status in Nigeria due to the efficient working partnership the outfit has with its wholesalers.
Why we introduced a new music tracking device — CCM
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media monitoring company, Compliance and Content Monitoring Limited (CCM), has identified the need to detect and track several songs played on the nation’s airwaves as the major reason for the introduction of musiktrak, another tracking device to its range of tracking devices. The device, which is available on www.musiktrak.com, the company explains, detects and provides complete, comprehensive and verifiable log of the airplay of songs by local and foreign artistes across 260 radio and television stations in Nigeria. Musiktrak, according to the Managing Director and Chief Executive Officer of the company, Mr. Tunde Onadele, is the first and only service that tracks song played across Nigeria with around the clock recording of free-to-air broadcast transmission, presented in two comprehensive report packages - the musiktrak report and the musiktrak chart. C M Y K
44 — Vanguard, MONDAY, FEBRUARY 2, 2015 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997
SOLUDO VS IWEALA: The pot and the kettle he office of Dr. Ngozi Okonjo Iweala, the coordinating Minister of the Economy has promptly responded to the content of a recently published article titled “BUHARI Vs JONATHAN – Beyond the election.” The article which was written by the former Governor of the Central Bank, Chukwuma Soludo, as an attempt to proffer solutions to our severe social and economic challenges simply echoed the prevailing popular sentiments regarding the failure, of President Jonathan’s Economic Policies, to improve the lot of our people. However, although Soludo’s contribution does not contain any fresh mind boggling revelations on the incompetence of the current Economic Management Team, his glowing reference to the economic performance during Obasanjo’s era should ordinarily be sweet, comforting notes to Ngozi who was the leader of the Economic ‘wizards’ who were largely seconded from their responsibilities with the IMF and World Bank to rejig the Nigerian economy; nonetheless, Soludo’s latter day condemnation of the “terrible policy choices” made by the Honourable Minister in her second coming in Jonathan’s administration, probably stung madam Minister as a betrayal of espirit des corps. Consequently, the Iron Lady quickly fired back in a Press release; in her response, Dr. Iweala noted that “It is a sad day for Nigeria and the Economics profession that someone like Soludo, a former CBN governor, should write such an article. If Soludo wants to regain respect, he should return to the path of professionalism. He certainly T
needs something to improve his image from that of someone whose sojourn into national economic management ended in disaster for the banking sector.” It is not clear when the Honourable Minister, realised that CBN’s management of monetary policies was a disaster; the question is, did she ever bring her reservations about the potential adverse impact of Soludo’s mismanagement to President Obasanjo, and if not, why did she choose to simply keep mute despite the potential magnitude of devastation that a predictable tsunami could cause to the banking sector? Was such reaction the Honourable Minister’s best expression of her patriotism? Curiously, those of us who expressed concerns on the shenanigans of Soludo’s management of the banking subsector were quite simply ignored until the bubble burst in 2008/9, despite the Governor’s unflinching assurances to all and sundry that the Nigerian banking sector was immune from the economic crisis that engulfed everywhere else worldwide. Latter events have shown that Soludo’s acclaimed banking consolidation and market regulations were all founded on quicksand and Okonjo Iweala is apparently clearly now more appreciative of the fact that Chukwuma’s reckless brand of banking regulation and supervision, ultimately, led to “massive accumulation of bad debts, (which) meant that our banks were ill-positioned to deal with the global financial crises when it hit. In fact, the banking sector was brought to its knees and required a massive bailout by Nigerian
taxpayers.” It has not been verified if Soludo was a covert beneficiary of the rot he knowingly induced in the banking sector, but according to Iweala, it was evident that “there was very little separation between the regulators and the regulated.” Thus, Soludo unwittingly or knowingly sustained a relationship that “is clearly a violation of a key requirement of central banking success.” Iweala holds that the regulatory lacuna led “to infractions in corporate governance as loans and other
CBN’s current monetary framework adopts the same template that Soludo inherited from his predecessor credit instruments running to hundreds of billions of Naira were extended to clients without following due process, and several of these loans could not be paid back.”
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o, according to Ngozi “ S o l u d o ’ s s i n g l e h a n d e d mismanagement of the banking sector led to an incredible accumulation of liabilities that will cost taxpayers about N5.67tn (over $36bn) to clean up.” Sadly, future generations will inherit this debt. The Honourable Minister also noted that the amount “constitutes the bulk of Nigeria’s contingent current liabilities’ which were decried as profligate in Soludo’s
Business & Economy Apapa traffic: Tanker drivers streamline operations By Godwin Oritse
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HE Petroleum Tanker Drivers branch of the National Union of Petroleum and Natural Gas Workers Union of Nigeria (NUPENG) has begun moves to streamline their operations with a view to managing the perennial traffic gridlock at the port end of the Apapa-Oshodi expressway. One of the major factors that has been attributed to the C M Y K
traffic situation, is the high concentration of tank farms in that area. Speaking to Vanguard, the Public Relations Officer of the Petroleum Tanker Drivers, Comrade Atanda Adebayo said that in order to bring some level of orderliness to the loading of tankers at the depots, tank farms now take turns to load. Adebayo explained that because of the problem created by the number of tank farms, the Union has resolved
to streamline the operations of these tank farms by allowing them to take turns in their operations. Explaining further, Adebayo said that some of these tank farms take turns to load saying that “when some of them are operating, others will be shut for about three days. “After another three days, the others will open up their operations while the ones that operated before them will shut down”
strategy, despite the needless cost and the attendant heavy accumulation of loans which are ultimately stored away as idle funds. Similarly, the present administration continues to battle with the oppressive burden of surplus cash which the former CBN Governor also sweated unsuccessfully throughout his tenure to mop up. Curiously, still no one appears concerned on the unending source of systemic surplus Naira despite its abiding adverse consequences on the level of inflation and the capacity of small and medium enterprises to thrive and create more jobs. Furthermore, CBN’s antisocial strategy of deliberately creating dollar scarcity after suffocating the market with freshly created humongous Naira values is actually responsible for increasingly weaker Naira exchange rates even when reserves are fortuitously bountiful; curiously, Lamido Sanusi kept faith with this same strategy and Emefiele has also become a loyal apostle. Sadly also, cost of funds to the real sector has remained well above 20%, the same oppressive rates that constrained industrial growth during the Soludo years as CBN Governor; inexplicably, also, over N40bn contributed as levies from banks’ profits under Soludo were returned by the Governor to the same banks because CBN could not come up with an acceptable strategy for disbursement! Yet, inspite of considerable evidence of impunity and controversial deals while CBN Governor, Soludo has surprisingly elected himself as our saviour. Save the Naira, Save Nigerians!!
article.” Conversely, Chukwuma’s article paints a completely different picture which portrays the erstwhile CBN Governor as the brain behind an exemplary and also socially and economically progressive Economic Management Team. Nonetheless, the public will recognise such perception as false. Indeed, the Economic strategies of the current administration are clearly a continuation of the strategies that typified the Obasanjo era. All the uncomplimentary features that Soludo observes in the current regime are infact amplified derivatives of Soludo/Iweala fiscal and monetary strategies between 1999-2007. For example, the fiscal tradition of comparatively modest annual capital votes against increasing humongous recurrent consumption, prevailed in that era; Okonjo Iweala has loyally followed the same trajectory, such that almost 90% of total spending in 2015 will be devoted to plain consumption with a paltry vote of 10% for infrastructural remediation; regrettably, education budget has hardly exceeded 15% since 1999, despite UNESCO’s best practice recommendation of 26% of annual budgets. Furthermore, CBN’s current monetary framework adopts the same template that Soludo inherited from his predecessor; for example, the oppressive system of placing government deposits for zero returns, while government embarks on regular borrowings from commercial banks with extreme rates which distort resource allocation was a permanent feature of Soludo’s monetary
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
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Group Business Editor Deputy Business Editor Energy Editor Asst. Business Editor Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Energy Reporter Industry/Agric. Reporter Maritime Reporter Insurance Reporter Capital Market Reporter
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Media/Marketing E-Commerce Industry Micro Finance Graphics Department
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