Financial vanguard

NOVEMBER 9, 2015

CBN moves to halt ‘shylock’ lending Banks must provide terms and conditions of a loan agreement Pricing, repayment schedule, repayment amount, tenure and opt out options Banks to provide financial counseling Set guidelines for debt collection

BY OMOH GABRIEL

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HE Central Bank of Nigeria CBN will soon introduce a set of measures that will protect bank customers from unethical interest rates, illegal charges and other

manipulations by bank officials. The rules which are in draft form are aimed at protecting bank customers from excessive exploitation by banks. The draft rules are currently being discussed by stakeholders. According to the soon-to-be-introduced rules, the

“CBN shall ensure that operators (banks), establish structures to prohibit predatory lending and hence support a positive credit culture in the industry.

Financial operators shall provide credit counseling to prevent consumers’ indebtedness due to limited financial

WORKSHOP: From left, Yinka Jimoh Abdulraheem, Head, Subsidiaries Conduct and Compliance, Access Bank Plc, Paula Parkinson, Assistant Legal Attaché, FBI, US Consulate, Lagos, Obinna Nwosu, Group Deputy Managing Director, Access Bank Plc; and Pattison Boleigha, Chief Conduct & Compliance Officer, Access Bank Plc at the Bank’s Compliance Awareness Week Stakeholders workshop which held at the bank’s head offices in Lagos.

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knowledge. Credit counseling is the process of educating consumers to prevent unnecessary debt and support in debt settlement”.

The CBN draft rules will further ensure that “Credit counseling facilities are available in Nigerian banks and accessible to all customers especially for customers that are most in need of this service or consumers that request this service. Consumers, the draft rule states “shall be made aware of such services and shall be encouraged to take advantage of such facilities provided by the operators.

When the rules become operational the rules stipulates that “Operators must provide detailed information on the terms and conditions of a loan agreement to consumers prior to executing the loan agreement. Such information must at a minimum include the pricing, repayment schedule, repayment amount, tenure and opt out options”.

According to the rules being fine tuned by monetary authorities, “The CBN shall set guidelines for ethical debt collection practices in the industry. These guidelines shall be based on dialogue, respect for the consumers’ privacy and longevity of consumer-operator relationships amongst others.

“In the event that consumers fail to meet their financial obligations, financial operators shall be encouraged to adopt ethical debt recovery practices such as recovery processes must be courteous, fair and non-coercive.

Operators shall ensure that personnel assigned to recover debts are properly trained. Consumers shall be informed in advance before a recovery process is initiated”.

The new rules that may come into effect soon states that “Sales promotions or related activities shall be conducted professionally and ethically. In a bid to generate increased business volumes or attract new customers, financial operators shall provide factual information and shall not seek to mislead consumers.

Financial operators shall also not take advantage of consumers’ inexperience, gullibility or lack of understanding. “ Financial operators shall be required to meet the demands of promotional offers. In addition, before

Continues on page 22

22 — Vanguard, MONDAY, NOVEMBER 9, 2015

Cover

The basic guide to starting your business (4) Daring successful business man has a mindset that is willing to take risks and tread on places people would not ordinarily want to tread.

He would not chicken out at the slightest threat, so if you intend to start and own your business, you must have a diehard mentality, otherwise you would quit before you even get started. It is also very important to consider the risks involved and your ability to handle them properly, since every business involves risks.

Most business people are very comfortable with modest risk but quite uncomfortable with big risks. Although they are unwilling to gamble on long shots, they are more willing to take chances if their individual skills can affect the probability of success. Then will they have the courage to step out into the unknown and pursue their personal dreams.

Goal getter A successful business man has the mindset of not just setting goals but also achieving the desired result.

He does not settle for less but always has his eyes on the prize. To him there are no impossibilities and failure is just part of the game. He does not believe in half measures but believes that he can go all the way and this mentality inspires a lot of confidence in clients and customers and will keep them coming. A high level of energy also keeps the businessman trudging through road blocks because he has his eyes fixed on long term goals. It is important you are very energetic and vibrant as it will ensure that your business is up and running.

You need to have a motivation from within and from those around you. The man who invented electricity, tried ninety-nine times and failed; he got it right the 100th time!

I dare say, that is the spirit you must possess, no matter how many times you fail, you keep trying it out until you get it right….bottom line you must delete the word IMPOSSIBLE from your dictionary. Period!

It’s very important you move with the right people and read books and materials that will prepare your mind and reposition your mindset towards positivity, because “if you can think it then you can be it”. Never forget “you are a product of your thoughts.”

This reminds me of a Nigerian drama series that aired on the Nigerian national television network (NTA) in the early 90s, BASSEY& COMPANY.

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INSPECTION: From left, Permanent Secretary, Federal Ministry of Works, Mr. Dauda Kigbu; Deputy President, Nigerian Association of Road Transport Owners (NARTO) Chief Ayoola Sadiku and Executive Secretary, NARTO, Mr. Aloga Ogbogo, during inspection of the new site for Trucks constructed by Apapa Tin Can Bridge at Apapa Lagos.

CBN moves to halt ‘shylock’ lending Continues from page 21 the launch of any sales promotion, operators must provide the CBN with evidence of capability to manage the influx of customers without diminishing service quality”.

The CBN in its draft rules said “Financial operators shall provide accurate information on financial products and services to consumers at all times to enable them make informed decisions. Such information must be timely, detailed, clear and unambiguous. The primary coverage areas to be addressed under this principle are: contract terms which “terms should contain adequate information that will enhance consumers’ decision making process prior to execution of the contract. Financial operators shall also inform consumers of the possibility of variations in terms and conditions of contracts due to changes in economic conditions before such contracts are executed.

Notice of Variations: operators shall give prior notice to consumers within the time specified in contracts, before implementing variations in terms and conditions of contracts; A d v e r t i s e m e n t : Advertisements and marketing materials must seek to convey as complete information as possible on the products and services being advertised; In this regard “The CBN shall issue guidelines to set the minimum disclosure requirements for products and services in contract agreements between financial operators C M Y K

and consumers of financial products and services. These guidelines at a minimum shall cover areas such as: fees and charges; penalties (prepayment costs and default charges); interests (payable or receivable); and payment and termination modalities “All fees, charges or payments to be made by a consumer for a product or service must be documented.

Financial operators shall also proactively inform consumers of the possibility of variations in terms and conditions of contracts should the condition upon which contract terms were reached change.

Contractual language shall be precise, clear and unambiguous. Information must be communicated in plain and simple language to limit the possibility of misinterpretation. Contract documents must be in legible font size. Where technical

Financial operators shall provide financial calculation tools on their websites to assist consumers to perform simple calculations that may be required to ascertain the suitability of certain financial products

terms are used, the financial operator shall take due care to ensure that such technical terms are clearly explained to the understanding of the consumer to avoid the occurrence of confusion or miscommunication.

According to the CBN draft rules “Financial operators shall display specific information such as interest rates, foreign exchange rates in a conspicuous place at customer engagement areas such as branches, cash centers, website and other electronic channels, on a daily basis. Financial operators shall provide financial calculation tools on their websites to assist consumers to perform simple calculations that may be required to ascertain the suitability of certain financial products. In addition, financial operators have a responsibility to make reasonable effort towards ensuring that consumers of financial products are knowledgeable about the products/service they may wish to purchase.

“The CBN shall publish rates offered by financial operators to enable Consumers make informed decisions in the selection of suitable products and services.

The rules to be applied soon said “Within a minimum timeline specified by the CBN, financial operators shall notify consumers about changes to terms and conditions of contracts prior to the implementation of such changes. Notice to consumers on variations to terms and conditions must at a minimum Continues on page 23

The lead act was fond of saying “if you want to be a millionaire, think like a millionaire”! As funny as it sounded then, it is still very true and applies to business.

So permit me to say if you want to be a successful business man, then think like one!

If you are going to run a business of your own, you should find something that makes you really happy. This should be at the core of why you are even looking at going into business of your own, because if you try and make something work and you have no passion for it, it probably won’t work out. If you have passion for the industry that you are working in, you will have a good chance of making it work out.

What make a business great are the people that run it and the passion that they have for it. Keep this in mind when you are thinking of starting a business of your own.

From experience, many just jump into business because they are excited about an idea and haven’t really thought about the ‘ whys and wherefores’. Taking a moment to reflect on your motivations and defining your purpose will be time well spent.

A lot of people go into business for the sole reason of making money; this is not a good idea. It’s not a good idea because the main ingredient for success is missing. The

if you want to be a successful business man, then think like one! main ingredient for success is passion, and it’s virtually impossible to maintain highlevels of energy when you’re doing something you don’t love. There will always be challenges in owning a business. Your love and passion is what takes you through those challenges.

Without that passion, you probably won’t make it.

Vanguard, MONDAY, NOVEMBER 9, 2015 — 23

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igeria from historical perspective, is always playing the catch up game. It has always adopted a fire brigade approach to issues of management. In fact, crisis management has been the style of leadership in Nigeria. It is when situations get out of hand that Nigerian leaders begin to adopt panic measures at solving problems. There were warnings in the past that crude oil prices will crash and Nigeria needed to build buffer, but it was ignored and today, the economy is facing challenges because early warnings were not acted upon.

The current barbaric act of Boko Haram was well known to Nigerian leaders. When it was in its infancy and would have been easy to nip in the bud, the warnings were ignored and today, the nation is bleeding both in human and material resources. All this waste of human lives would have been avoided were Nigeria a proactive country.

At the global scene, the fourth industrial revolution is fast gaining momentum.

Industries and governments are innovating and changing the old ways of doing things.

But Nigeria has stuck to the old ways. The pace of technological innovation going on around the world will pose enormous challenges to people, companies and economies as they are fast changing the way people learn, work, live and stay alive.

With the Nigerian educational system in disarray, with poor graduate turn-out, nanotechnology, robotics and people who are trying to address real problems and the how ready is Nigeria as a 3-D printing, among others. country, its businesses and The question asked at the political show. Having closer human resource managers forum is very relevant to the accountability and judging prepared to meet the coming Nigeria situation, today. And politicians on their jobs rather challenging fourth industrial the question is “Are we than random political revolution? investing enough in narratives would help a lot.”

A trip outside Nigeria will The Fourth Industrial institutions that enable the Revolution is all about the platforms to accommodate give the reader a practical rapid proliferation of different perspectives?” asked example. In most international technologies that will have Diana Farrell, Chief Executive airports in Europe, Asia, broad and deep impact on all Officer and President of China and America, transit aspects of life. This is already JPMorgan Chase Institute in trains are no longer manned upon us, raising profound the US. “We need a common by humans. They are questions about the future, platform to connect the dots. programmed to run and stop including major ethical But we are so far away from in designated areas as challenges. At the World that.” Governments can take a programmed. Today, out there, Economic Forum’s Summit on long time to produce drones are about being the Global Agenda 2015, legislation and implement commercialised to deliver which was held in Abu Dhabi, major programmes, and once products to the doorsteps of technology-thought leaders they do, the policies may consumers. Robots are taking warned of the impending already be obsolete, Farrell over from many humans in challenges posed by reckoned. Politics can get in factories in Japan and others. innovations in artificial the way too, she noted. “We Here in Nigeria, passengers intelligence, biotechnology, have a disconnect between walk from planes to arrival

How prepared is Nigeria for the Fourth Industrial Revolution, as a matter of survival?

point, if the airport authority is kind enough, it provides buses.

Now that Nigeria claims to have a government with a mantra of change as its slogan, it is very appropriate for the Nigerian political milieu to recast governance systems for the age of the Fourth Industrial Revolution, so that both the executive and the legislature are more responsive and responsible in addressing the major global challenges staring us in the face.

Nigerians must come to the reality that humankind is moving from physicality to a data-based world. This will mean work involving distributed teams, distance employment and the dynamic

collection and exchange of data about ourselves. The essence of the fourth industrial revolution is the need to train people in an entirely new set of 21st– Century skills, which are in fact the oldest skills – communication, collaboration, empathy, respect and how to overcome cultural boundaries.

The revolution requires a work force that can retool themselves. The Nigerian Labour Congress had better get to work now to begin to task employers of labour in the country on the retraining instead of embarking on incessant strike actions. The coming industrial revolution certainly has major implications for education.

People of a certain age will have a harder time to learn and cope with the new ways of doing things. Countries will either take off or fall behind in the new dispensation.

The advent of this new industrial revolution is raising an enormous range of questions, including ethical challenges that will be difficult to answer. Consider issues relating to self-driving cars.

Should they be programmed to avoid running into a group of pedestrians when the alternative is hitting a wall and possibly injuring the driver? There are many other ethical and security challenges, including privacy and data integrity, as well as the differential between those who have access and knowhow to use the technologies and those who do not. Is Nigeria preparing for this revolution? Will Nigerians allow this to pass them by? Is Nigeria going to play catchup in this? Nigerians must wake up to this call.

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CBN moves to halt ‘shylock’ lending Continues from page 22 contain the following details: changes in rates / charges (existing rate and new rate that is being introduced); rationale for variation; commencement date of new terms and conditions; options available to the consumer.

It also said that “Variation

notice must be at no cost to the consumer and there must be evidence of receipt of notice by the consumer. Operators shall provide periodic updates to consumers on outstanding obligations. Operators shall respond to requests for waivers, concession or other variations on credit facilities within specified timelines,

failing which such requests would be deemed to have been accepted.

“Financial operators must be truthful and clear in all communication (including advertisements) with consumers. Communications/ advertisements on financial products and services must at a minimum: Not be

misleading; Be clear and explicitly state the features of the products/services; Not seek to misrepresent or exaggerate the benefits of the products/ services It further said that the CBN shall ensure that adverts by operators align with approved product features. Adverts not in line with approved product

features will attract appropriate penalty and can be recalled.

Adverts shall disclose all conditions associated with the products and services. For example, where a promotional material makes reference to interest rates, financial operators shall indicate all other applicable charges. In addition, measures shall be provided for consumers to make further enquiries.

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24— Vanguard, MONDAY, NOVEMBER 9, 2015

Business & Economy

Good governance, accountability roadmap to Nigeria’s economic growth

BY PRINCEWILL EKWUJURU

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peakers at the 2015 BrandiQ symposium have said that it is only when Nigerians begin to demand good governance, public accountability and become responsible citizens that Nigeria can attain its economic growth.

The Guest Speaker, Dr. Obiageli Ezekwesili, a senior economic advisor at Open Society Foundations, OSF, at the symposium themed: Reinventing Brand st Nigeria: For the 21 century market economy through public accountability and responsible citizenship in Lagos, said accountability and good governance goes beyond mere rhetorics of fighting corruption.

Ezekwesili who drew examples of the growth strategies of countries like Singapore, China and India, said that until Nigeria toes the line to radically revamp its economy, it will continue to remain in the doldrums of backwardness.

The Guest speaker noted that poor governance has been the major problem of the country, while she stated that until Nigerians begin to demand for good governance and public accountability, poor governance will continue to stare Nigerian in the face.

She stated that today ’s economy of the world faces a considerable difference in st contest, saying that the 21 century market economy brings along with it serious evolution that will transcend to economic growth and advancement Continuing, she restated that the above countries had to close their doors to think of what they could do to move from poverty level to their present statues, while noting that today the per capita income of Singapore is $65,000 and Nigeria’s per capita still remains at $2,000, even though bought countries were at a near per in the 1970’s.

In addition, Professor Abubakar Momoh, a panelist said that Nigeria’s problem is not much about ideology, but that the “capitalism that we have practiced in the country has not developed the country.

We have not been able to build a competitive economy in Nigeria.” he stated.

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Opportunities still exist in capital market — NSE CEO

BY EMMA UJAH

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he Chief Executive Officer, CEO, of the Nigerian Stock Exchange, Mr. Oscar Onyema, has said that opportunities still exist for investors in stocks, in spite of the current downturn in the capital market. He spoke during an interview after the Annual General Meeting, AGM, of the Kano/Kaduna Zonal Branch in Abuja.

His words, “It is important for investors to understand that just because the market is going down doesn’t mean there are no opportunities. So if you look at large cap, small cap and med cap securities; small cap securities have done pretty well, they have returned about 22 percent positive.

“Now the whole market is about 15 percent and that is because of the weight of the large cap so it is important to dig deeper and understand the dynamics of the market and if you don’t have time engage a professional to walk you through all of that.” He admitted a low investor confidence in the market but noted that it should not be a surprise given the fact that the nation’s economy had nosedived.

According to him, “Investor confidence is very low given that the market volatility we have seen and given the down turn in the all share index. Having said that, the market is reflecting the economy.

It is a barometer for the economy so it will be surprising if the market is going up when the economy is having shocks.”

The downturn in the market, notwithstanding, the D-G said that the current market situation present fresh opportunities for investors, as according to him, proper professional market analysis could be very helpful in this regard. His words, “It is important for investors to also understand that there have been significant sell-offs between last year and this year and it could present opportunity. Again it is important to do the analysis, understand where those opportunities are but certainly the opportunities, not only in the equity side but across the various asset classes we always advise investors to diversify their portfolios to have exposure in different assets classes that are not

LAUNCH: From left, National Sales Manager, Abdul Akeem Wahab; Distributor Ajeast Nigeria ,Uche Ezeaku; Country Manager, Theo Williams And Head Of Marketing, Michael Daniels, all Of Ajeast Nigeria At the company's regional commercial launch In Enugu. necessarily correlated.”

Mr. Onyema disclosed that the Kano/Kaduna zone recorded more trading outside of Lagos than all the other branch councils in the country in 2014.

He however noted that the quantum of trading was much lower than the 2013 recorded, as he described last year as “very difficult,” especially towards the end of the year giving the oil price shocks. He

added that the bulk of the trading activities recorded in the branch during the year under review took place in Abuja.

The NSE boss described Nigerian investors as “typically momentous traders,” adding, “If the market is going up you see a lot of people coming out to buy, if the market is going down people stay on the side line selling and that hasn’t

changed.”

The exchange, he said have stepped up its sensitization campaign activities and that there were 200 financial literacy programmes throughout the nation last, year. He disclosed that most of the programmes were held in the south and that the security challenges in the North, negatively affected the organisation’s public awareness in that part of the country.

N42bn alleged Railway fraud: Memos flood House Committee Former SGF, 2 ex-PDP chairmen fingered

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emoranda from various stakeholders have started pouring in before the House of Representatives Ad-hoc Committee set up to investigate contract awards for the Rehabilitation of Railway tracks and the procurement of Coaches and Locomotives between 20102014.

“Nigerians would be shocked at the level of massive frauds committed by highly placed government functionaries when the findings of this committee are made public,” a source close to the committee told Vanguard, yesterday.

According to the source, already, many good spirited members of the public have submitted detailed momeranda on how a few government functionaries

literally stole several billions of Naira under the guise of rehabilitating the nation’s Railway network.

Sources said that a former Secretary to the Government of the Federation, SGF and two former National Chairmen of the Peoples Democratic Party, PDP, who held very key positions on the Board of the NRC were said to have been fingered as having taken decisions that were less than in public interest in the rehabilitation project.

It was learnt that while it would be difficult for top management of the corporation and the Federal Ministry of Transport to claim ignorance in what went wrong some of them who were not involved have come forward to volunteer information on how much of

the infractions were carried out.

It was learnt that there were cases were coaches and locomotives procured were way far from specifications for which public funds were paid and that in some cases, payments which had already been made through the regular budgetary provisions were repeated through the SURE-P window.

As learnt the worse method through which those involved fleeced the nation was complete refusal to do jobs after collecting money for them.

Consequently, out of a total contract sum of N79.337 billion for various segments of the rehabilitation, N42. 086 billion had allegedly been paid to the contractors but with very little work done.

Vanguard, MONDAY, NOVEMBER 9, 2015 — 25

Corporate Report

Unilever Nigeria: The pain of high interest rate

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nilever Nigeria is reeling in pain inflicted on its operations by high interest rates. The consumer goods manufacturer is compelled to surrender to its lenders the revenue it desires to save for shareholders. Rising finance charges are responsible for the major profit drops the company has experienced in the past two years. Interest expenses doubled at the end of the company ’s third quarter operations this year, which has increased the speed of the profit drop.

Unilever lost nearly one-half in its preceding year’s profit at the end of 2014 to the lowest figure in six years. It closed the third quarter operations in September with a crash of 92% in after tax profit year-onyear. Finance charges gulped about N2.4 billion, double the N1.19 billion it paid in the same period last year.

The company ’ after tax profit of N590 million in the first quarter was lowered by a loss in the second quarter to N85.6 million at the end of June. The loss followed the rise of 137% in interest expenses to over N1.6 billion.

After tax profit improved to about N141 million in the third quarter.

Based on the growth rate in the third quarter, after tax profit is projected at N200 million for Unilever in 2015.

This will be a big fall from the net profit figure of N2.41 billion the company posted at the end of 2014. Unilever maintained profit growth every year since 2007 to a peak of N5.60 billion in 2012.

A decline of N15.6% in 2013 lowered the company’s after tax profit to N4.72 billion,

which accelerated to a drop of 49% in 2014.

Sales revenue declined by 2% to N42.70 billion year-onyear at the end of the third quarter but a moderate growth in turnover still looks likely for the company at full year. We expect turnover to be in the region of N58 billion for Unilever at the end of 2015, which will be an improvement of about 5% over the 2014 closing figure of N55.74 billion. The company suffered a drop of N4.25 billion in turnover last year from its sales revenue peak of over N60 billion in 2013.

Profit margin has thinned down to a vanishing point from 4.2% in the same period last year and from 4.3% at the end of 2014 to 0.3% at the end of September. The declining

profit margin is a reflection of inability to grow sales revenue and rising operating costs led by finance charges.

Apart from interest expenses, cost of sales is also encroaching into sales revenue. It grew by 4% yearon-year in the third quarter against a 2% decline in sales revenue. This has lowered gross profit margin from 38.4% in the same period last year to 34.8% at the end of the third quarter. However, distribution/administrative expenses, which proved difficult to control last year, are now in check with a decline of 4% at the end of the third quarter.

The company ’s total borrowings have declined slightly to N16.67 billion from the closing figure in 2014,

which cannot explain the doubling of interest expenses so far in the current year.

While bank overdraft has expanded by 87% to N7.38 billion from the closing figure last year, short-term borrowings have dropped by 32% to N8.26 billion and longterm debts are only moderately up by at N799 million at the end of September. How a decline of 1.4% in total borrowings led to the doubling of interest charges may have to be explained by the details of the company’s accounts.

The cost-income relationship of the company during the review period resulted in a decline in net profit margin from 4.2% in the same quarter last year to 0.3% at the end of September. The

company earned 4 kobo per share at the end of the third quarter, down from 48 kobo in the same period last year.

Other major developments in the balance sheet include a drop of 25% in inventories, an increase of 11% in trade debtors and other receivables and a rise of 203% in cash and bank balances. Trade and other payables rose by 29% during the period.

The company is facing cash flow difficulties induced mainly by cash utilisation for financing activities. There is however a major improvement with a shift from a net cash utilisation of over N1.82 billion from operating activities at the end of last year to a net cash generation of N9.78 billion from operating activities at the end of the third quarter. This was still insufficient to meet cash requirements for investing and financing activities, resulting in a net cash decrease at the end of the reporting period.

FORUM: From left, Marketing Manager, Commercial Air Conditioning, Mr. Sandeep Koul; General Manager, Air Conditioning and Energy Solutions, Mr. Cholyong Park, both of LG Electronics West Africa operations; Managing Director, Blue Ocean Technical Services, Mr. Anupam Ghosal; and Marketing Head, Blue Ocean Technical Services, Mrs Jennifer Onoyom, during Africa Hotel and Resort Expansion Forum, in Lagos.

Africa Prudential Registrars speeds up earnings growth

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frica Prudential Registrars is steering another strong growth in profit this year. It closed third quarter operations with a bigger profit figure than it earned in all of 2014. Its growth engines are fired on stable growth in revenue and a big gain in profit margin. The company looks good to grow profit by up to one-half this year.

The share registration company is outstanding among all the companies listed on the Nigerian Stock Exchange in terms of ability to convert revenue into profit.

It ended 2014 operations with a leading net profit margin of 54%, which has stretched out further to over 61% at the end of the third quarter.

The company raised gross earnings by 17% year-on-year to N1.76 million at the end of the third quarter. Net investment income, which grew by 33.4% year-on-year to N1.15 billion, led revenue growth during the period.

Registrar ’s fee income declined, as dividend payments by client companies dropped sharply during the period.

Based on the third quarter

growth rate, turnover is projected to grow by 34% to N2.50 billion for Africa Prudential Registrars at the end of 2015. The company closed last year’s operations with a revenue figure of N1.86 billion.

The company announced an after tax profit of N1.08 billion at the end of the third quarter, which is a year-on-year growth of 30.5%. This is already above the N1.03 billion after tax profit it posted at the end of 2014. After tax profit is projected at N1.6 billion for Africa Prudential Registrars in 2015, an

increase of 55% over the net profit figure in 2014. This will be an accelerated growth from the growth of 33.2% in after tax profit in 2014.

Africa Prudential Registrars continues to improve net profit margin from 49.3% at the end of 2013 to 54% in 2014 and further to 61.4% at the end of the third quarter of the current year. The company earned 54 kobo per share at the end of the third quarter, rising from 41 kobo in the same period last year and already ahead of the 52 kobo it earned at the end of 2014.

It is expected to close the

current financial year with earnings per share of 80 kobo.

The company has maintained a cash dividend of 35 kobo per share in the past two years.

The company ’s earning assets are its portfolios of financial assets. At the end of the third quarter, it had over N7.4 billion in financial assets held to maturity and about N3.66 billion in financial assets available for sale. The critical element of the company ’s over N19 billion balance sheet is the over N14 billion of customers’ deposits at its command C M Y K

26 — Vanguard, MONDAY, NOVEMBER 9, 2015

Corporate Report

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Vanguard, MONDAY, NOVEMBER 9, 2015 — 27

Corporate Finance

BY NKIRUKA NNOROM

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he need to integrate Africa Exchange and explore in-depth the strength emanating from integration of Africa’s securities exchange will be the key focus of African Securities Exchanges Association (ASEA) conference scheduled to hold later this month.

The conference with the theme: “Africa Evermore: Growth for Sustainability” will be held in Johannesburg, South Africa from November 15-17, 2015.

According to Oscar Onyema, ASEA President and Chief Executive Officer of the Nigerian Stock Exchange (NSE), the theme embodies the potential, growth, and stability of Africa’s capital markets.

He added that capital markets have been the key drivers of Africa’s economic transformation and continue to play a central role in the continent’s growth story.

“The conference is important as it features high level discussions covering themes that are relevant to

ASEA confab to x-ray integration of African exchanges

PRESENTATION - From left, Jeffery Akor, MTN Project Fame 8 Winner, Richard Iweanogbe, General Manager, Consumer Marketing and Akinlolu Oludiran, Segment Manager, Medium Value Marketing and Strategy Division, both of MTN Nigeria during the formal presentation of a car to the MTN Project Fame Season 8 winner at MTN Headquarters in Lagos. our capital markets and opportunities to network with leading industry players from across the continent,” Onyema said.

In his own contribution, Nicky Newton-King, Chief Executive Officer, Johannesburg Stock Exchange ( J S E ) , s a i d : “Those w h o operate in t h e regulated market need to know that we are part of the g l o b a l financial markets.

“We are already beginning to see this for example in East Africa, where they are driving significant regional connectivity.”

One of the topics up for discussion will be to look at the “Role of the Exchange as a Corporate Citizen”.

Increasingly, investment decisions are being driven by considerations of risk, impact, and sustainability that are far wider than just financial returns. ASEA assists in promoting and educating members and stakeholders on the importance of socially responsible investments and the need to pay attention to

environmental, social, and governance (ESG) issues,” she stated.

Delegates will also have the opportunity to explore how to attract Sovereign Wealth Fund (SWF) investors and examine how they see Africa’s exchanges. Malawi Stock Exchange CEO John Kamanga, who will be moderating the discussion, said the conference will play a large role in focusing attention on what was happening on the African stock exchanges.

A number of ASEA’s member countries have already launched SWFs, including Angola, Ghana, and Nigeria.

SWFs invest surplus revenues and can be an effective fiscal stabilisation mechanism, enabling governments to access liquid assets, and channel investment into specific projects like infrastructure development.

“The ASEA conference serves to confirm that we are open and ready to do business,” said Kamanga.

“There are, of course, the inherent benefits of being able to network and interact with our colleagues, with the international fund managers and stock exchange members, and with all this comes the transfer of skills and knowledge.”

Newton-King concurred. “It is about finding ways to share knowledge and experiences so as to build depth and sophistication of African markets across the continent that will allow linkages to develop over time.”

Alade highlights importance of adoption of IFRS

By DAVID OKPE

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he Deputy Gover nor, Economic Policy of the Central Bank of Nigeria, Sarah Alade, has called for greater compliance to globally accepted financial standards among stakeholders in the capital market.

She spoke at the launch of Africa IFRS Academy (AIA) by KPMG Nigeria and Shasat (UK) Limited to address the shortage of skills and to offer world class International Financial Reporting Standard (IFRS) training to Nigerian and African accounting professionals.

While commending KPMG and Shasat UK for setting up the academy, Alade said the move would help address one of the major challenges to compliance among Nigerian and

African business entities by breaching the skills gap and ensure that the continent was abreast of global best practices.

“Attempts at standardizing financial reporting have become universal with many countries jettisoning their national standards for the IFRS. The IFRS Foundation in 2014 completed a research on the use of IFRS around the world. Of 129 countries reviewed, nearly all made a public commitment to IFRS,” she said.

She explained that global investors were more attracted to markets that they could understand, trust and have confidence in. For this reason, she added, countries that adopt internationally accepted accounting standards are at an advantage over those that do not.

28— Vanguard, MONDAY, NOVEMBER 9, 2015

C M Y K

Vanguard, MONDAY, NOVEMBER 9, 2015 — 29

30— Vanguard, MONDAY, NOVEMBER 9, 2015

“The bail-out is a temporary assistance to the states to pay salaries. The bail-out is the calculation of arrears of salaries being owed by states. The truth of the matter is that because of the ongoing fall in revenue, accruals to states from the Federation Account and IGR is reducing.”

Governor Mimiko of Ondo State, October 15, 2015.

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f there is one thing uniting the thirty-six state governors, irrespective of political affiliation, it is the fact that the two bail-out arrangements fashioned out by the Federal Government have not solved the problem. Doctors in the medical field know the phenomenon too well. It is called treating the symptom instead of the cause(s) of a disease. And, like cancer, which starts as a small lump and becomes bigger on lifethreatening, economic tumour starts slowly; get bigger; and eventually might lead to economic calamity.

One State, Zamfara, is already feeling the pains of procrastination. Its creditors secured a court order to seize the funds in all its bank accounts.

Suddenly, insufficient funds have become no funds at all for Zamfara. It might not be the last. Banking sources inform me that two states in the South-West might soon receive the same treatment.

And, even they will not be the last. Nigerian States might find it increasingly hazardous to keep their money in banks.

Then what? Economic paralysis; that is what.

Let me quickly remind the reader about the two bail-out

Why monthly allocations to states will never be enough — 1. packages approved by the Federal Government for the states – after President Buhari first turned out the appeal from the state governors. Let me also confess my role in promoting the bail-out decision. However, while supporting bail-out to the states as inevitable, it was also pointed out that it would not solve the problem unless the state governments become more responsible. Mostly, they are short-term in their orientation and are mostly irresponsible. A few examples will illustrate the point.

Pilgrimages, Christian or Moslem, represent the classic waste because the expenditure is not expected to yield any returns —unlike investments which should be self-liquidating while hopefully yielding returns as well.

To the best of my knowledge, as a Christian, there is nothing in the Bible mandating a Christian to travel to Jerusalem or any other place on pilgrimage. So, why have state governments been undertaking the sponsorship of Christian Pilgrimage?

Right on my working table is a copy of The Quran in English. It is my third copy – the first two developed wings mysteriously. My first was purchased in 1967 in the Middle East. While the Quran made it one of the five pillars of Islam that those who can afford it should proceed on pilgrimage to the Holy Land, there is nothing in it which passed the obligation to fund the pilgrimage to a third party. So, why do governments sponsor pilgrims to Mecca?

It is noteworthy that no government in the First Republic considered it a duty to sponsor pilgrims — Christians or Muslims.

Nigerian politicians for purely selfish political reasons have latched on to sponsorship of the pilgrimages and have turned them into avenues for corrupt practices. Born and bred in Lagos, I am too familiar with the corrupt practices attending the exercise each and every time they embarked on it. Other States cannot be different because promotion of religion had never been the motivation for sponsoring pilgrims. When

huge sums of state funds are wasted annually doing what should not be done, there is that much less to spend on the crucial matters.

Among those with salaries unpaid for several months were the staff of the Pilgrims Welfare Board (or some such unnecessary unit) who still remain in office draining funds needed for education for instance. No state which collected any of the bail-out packages has announced the dissolution of its Pilgrims Welfare Board – meaning they continue to act as a drain on resources.

Granted, because the incumbent governors met the Boards in place and they have used them for personal political advantage, it will be difficult for them to close those shops. Those benefiting immensely from the waste will also resist the dissolution. But, the governors and the people of the states have a choice.

They can admit that this nonsense is no longer sustainable or they can run their states to the ground.

Then, not only will sponsorship of pilgrimages stop; everything else will

grind to a halt as well. As Bernard Malamud had told us in THE FIXER, “In a sick country, every step to health is an insult to those who live on its sickness.” Pilgrim Welfare Boards are populated by people who live on the misguided notion that government should fund religions.

Finally, one should ask if Christianity and Islam are the only two religions in Nigeria.

To the best of my knowledge, with the possible exception of Osun State’s sponsorship of Osun Osogbo Festival, no other state extends the courtesy to our traditional religions. Even Lagos State stands aloof as the Egungun, Eyo, Igunu Festivals are funded and celebrated by the believers. Yet Nigeria is supposed to have no state religion. The hypocrisy is apparent. What is nor so clear is the colossal financial waste by a poor country on this fundamental mistake. As long as we continue to throw billions of naira at Saudi and Israel every year, there will never be enough money for the states henceforth….

Vanguard, MONDAY, NOVEMBER 9, 2015 — 31

Banking & Finance

Keystone Bank Empowers Female Entrepreneurs

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eystone Bank, through its Pink Network has organised a training program aimed at growing the businesses of its array of female entrepreneurs. The training is part of its continuous effort in supporting female entrepreneurs, The training, which held in Lagos, was termed PinkPreneur and it’s the first edition of sessions that would be held regularly. Various facilitators taught on efficiently using social media to promote businesses, business education and importance of creating a sustainable business structure as well educating the participants on the benefits of the flagship Pink Account.

Forex Rally debuts in Nigeria

BY JONAH NWOKPOKU

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orex Rally, an international forex brokerage company has officially launched its operations in Lagos.

Apart from providing an array of free educational resources to empower traders with access to global forex industry expertise through local experience, Forex Rally has also introduced the first ever Nigerian Forex Championship.

The championship will offer attractive prizes and educational resources to participants.

The competition is designed to encourage local traders to achieve their financial goals.

For three months beginning November 2nd to 29th January 2016, traders have the opportunity to win one of the thirty prizes from a fund worth over $100, 000. The Champion will be awarded a grand prize of luxurious Toyota Hilux. To participate, traders must be over 18 years and be resident in Nigeria.

According to Forex Rally, participants can register by opening a contest account at www.forexrally.trade and deposit a minimum of $500 dollars, about N100, 000. The winner will be the trader with the highest number of points determined by three categories: ROI (Return on Investment), Deposits amount and Turnover.

Effective judicial process critical to financial stability –NDIC

BY BABAJIDE KOMOLAFE

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he Nigeria Deposit I n s u r a n c e Corporation (NDIC) has reiterated that the Nigerian Judiciary is a critical institution towards achieving its core mandate of depositor protection and its contribution to financial system stability.

The Managing Director and Chief Executive of the NDIC, Alhaji Umaru Ibrahim stated this at the opening ceremony of the Corporation’s 2015 Sensitization Seminar for Judges of States and Federal Capital Territory (FCT) High Courts in Abuja. Alhaji Ibrahim said that no matter how robust the NDIC’s extant laws, the Corporation needed the legal support from the judiciary to achieve its mandate, adding that the Corporation would continue to seek the cooperation and understanding of the judiciary, given that the Judiciary is constitutionally vested with the powers of interpretation of statutes and laws in the Federation.

The theme of the seminar was, “Challenges to Deposit Insurance Law and Practice in Nigeria”.

Represented by the Corporation’s Executive Director Operations, Prince Aghatise Erediauwa at the seminar Ibrahim said that the forum was intended to address the challenges being faced by the

Corporation in its bid to successfully discharge its mandate.

Prince Aghatise enumerated some of the major challenges such as the menace of protracted and complex bank liquidation related litigations as well as their attendant consequences, the execution of court judgments against the assets of the Corporation as the liquidator of failed banks and lack of proper understanding of its proper legal status on its role as a Deposit Insurer which is distinct from its status as a bank liquidator. He urged the participants to critically examine these challenges

with a view to proffering a lasting solution in order to empower the Corporation to effectively discharge its mandate.

While declaring the seminar open, the Chief Justice of Nigeria and Chairman, Board of Governors of the National Judicial Institute, Hon. Justice Mahmud Mohammed, noted that some of the esoteric legal issues bordering on the established rights of creditors, shareholders and depositors of failed financial institutions were genuine matters before the courts. Hon. Justice Mohammed therefore called for a clear and proper understanding of the concept

and operation of bridge banks as well as the execution of assets of failed banks within the context of deposit insurance system (DIS). This, according to him, would facilitate better appreciation of the legal issues by the judiciary and eventually lead to more informed court judgments. He urged the participants to actively utilize the knowledge gained at the seminar in the course of their duties and also enjoined them to continue to uphold the highest standards of ethics and integrity. About sixty (60) Judges of States and FCT High Courts attended the seminar.

PROMO: From left, Chidinma Lawanson, Head, MSME and Agency Banking, Diamond Bank Plc; Ayoola Yusuf, Prize Winner; Hauwa Abdullahi, Prize Winner; and Ebere Nwaolikpe, Assistant Marketing Manager ,Western Union, ECOWAS Region, at the Back To School WESTERN UNION prize presentation ceremony held in Lagos.

Access bank leadership confab focuses on technology, innovation

BY JONAH NWOKPOKU

T

he second edition of Access bank’s international leadership conference which is billed for December 10, 2015 in Lagos is expected to focus on technology and innovation as imperatives for driving economic transformation in Nigeria.

The conference which is themed: ‘Leading in a transformational world: The imperative of innovation’ will feature international leaders in technology, business and politics as speakers.

These include: Co-founder of Facebook, Chris Hughes, CoFounder of Apple, Steve Wozniac and Air Asia Co Founder/CEO, Tony Fernandes.

Others include: Former Chairman of the Federal Reserve, USA, Ben Bernanke, Professor of Global Health, Sweden's Karolina Institute, Hans Rosling, Professor of Economics, University of Sussex, Mariana Mazzucato, F O u n d e r / C E O , Gigameet.com, Chinedu Echeruo and Founder of Infosys, Narayana Murthy, amongst others.

Speaking at a press briefing at the Bank’s head office in Lagos, Executive Director, Personal Banking Division, Victor Etuokwu said these inspirational leaders from the global private and public sectors will be discussing the major themes facing Africa, the world economy and the social transformation created

by changing technology.

He said the event will be moderated by several renowned speakers including Jose-Maria Figueres, former President of Costa Rica and now a leading campaigner on environmental issues.

He added that the presence of other global leaders including past Presidents and Prime Ministers as witnessed during the inaugural conference in 2013 are also expected.

According to him, “Lifechanging innovations popping up in unexpected places around the globe with breakthrough developments in sectors such as nanotech ,biotech, artificial intelligence, robotics and more, will affect every sector of the global economy in such

a way that businesses will have nowhere to hide.

Innovation means big change and even bigger opportunities for those who decide to be part of it.”

Also speaking, keynote speaker and Access Bank Chief Executive, Herbert Wigwe, said: “I am delighted to welcome such a distinguished line-up of individuals to the Access Conference 2015. We founded the event in recognition that Africa must now play a central role in the global debates that matter to its citizens. Whether it is technology, entrepreneurship or the impact of financial regulation on growth, the future direction of the world is increasingly being played out in this continent.

32 — Vanguard, MONDAY, NOVEMBER 9, 2015

Banking & Finance

AWARD: From left, Ms. Foluke Aboderin, Ag. Deputy Managing Director, Corporate BankEcobank Nigeria presenting Industrialist of the Year for West Africa Award (sponsored by Ecobank) to representative of Alhaji Aliko Dangote (Winner), Mr. Knut Ulvmoen, Group Executive Director, Dangote Group and Frederic Van de Vyver, Head, West Africa - CNBC Africa, during the All Africa Business Leaders Awards (AABLA) in Lagos last week.

Banks extort excessive CoT, upfront interest charges from SMEs STORIES BY BABAJIDE KOMOLAFE

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anks participating in the N220 billion Micro Small and Medium Enterprises (MSME) Fund have been found to subject SMEs to excessive

Commission on Turnover (CoT) charges and upfront payment of interest on loans.

These violations of the guidelines for the MSME fund were highlights of a verification exercise conducted by the Central Bank of Nigeria (CBN) to

monitor disbursement of loans to SMEs under the Fund.

Reviewing activities of the Fund in the first half of 2015, the CBN in its Financial Stability Report for June 2015, stated, “During the period under review, activities carried out by the CBN under

the Micro, Small and Medium Enterprises Development Fund (MSMEDF) included: “The review of the Guidelines to address some key issues including: reduction of interest rate for PFIs from 3 per cent to 2 per cent; reduction of the financial asset collateral requirement from 75 per cent to 50 per cent; removal of corporate governance structure from the checklist for PFIs; and reduction of the required audited accounts from two to one year.

“The CBN also collaboration with the Bankers’ Committee to organize a workshop that addressed the issue of low access to MSMEDF by banks.

The learning points from the workshop included: the need to increase the list of eligible activities provided for in the Guidelines; annual bank performance survey report on lending to SMEs; excellence awards to deserving banks under the MSMEDF; and the need for review of SME credit policies in banks.

“As part of the efforts to improve outreach to MSMEs and increase liquidity to fund providers nationwide, an additional sum of N45.42 billion was released.

Specifically, 9,663 male and 15,547 female micro enterprise owners and 67 SMEs benefitted from the Fund during the review period. In addition, the Scheme elicited the participation of 24 State Governments, 13 Deposit Money Banks (DMBs) and 56 microfinance banks (MFBs)”.

Union Bank boosts saving culture with UnionKorrect U

nion Bank of Nigeria Plc has launched UnionKorrect, a savings account called designed to boost savings culture in the country.

Speaking at the launch of the product in Lagos on Monday, the Head of Retail Banking, Union Bank, Mr. Carlos Wanderley, said the product is available at any Union Bank branch.

He explained that the UnionKorrect account will be opened as a sub-account linked to the current or savings account of a customer.

All a customer need to do transfer N5,000 every month from his or her main account at Union Bank to the UnionKorrect account.

Wanderley explained: “When I came to Nigeria, One thing I noticed is that a lot of Nigerians use their savings account as a transaction account. So, at the end of the day, their monies do not stay in their account

for the purpose of saving for the future as they want. And there are no incentives for such account holders.

“So, what we have done is to improve the ability for people to maximise their savings, and that is what the UnionKorrect account is all about. You save for a tenor of two or four years, enjoy interest on your savings and you stand a chance of winning

a fantastic cash prize every quarter.

“So, at the end of the period, 300 people among 10,000 customers of Union Bank would be getting cash reward of between N100,000 and N1 million. A customer can have as many UnionKorrect accounts as they wish.”

Wanderley said the UnionKorrect is the first of

many innovative products that the bank would introduce to the market.

Union Bank is here to win, he added.

Also, the Head, Retail Products, Union Bank, Mr. Sheahan Arasaratnam, explained that the idea of having 10,000 customers participate in the first tranche is to make it possible for a lot of customers to have a chance to win.

Skye Bank employees donate to displaced people

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mployees of Skye Bank Plc have donated relief materials worth N20 million to the displaced people in Nasarawa State and the Federal Capital Territory.

The Skye Bank employees under the aegis of the of its ‘Employees Volunteerism Initiative’, distributed relief materials to over 120 families consisting of about 800 individuals in New Karshi, Nasarawa State, in addition to reaching out to another 100 families of Chibok people at their camp in Kuje, Federaal Capital Territory.

The relief materials include 2000 bags of rice, 2000 bags of Indomie noodles, beverages,

blankets, tooth paste, pampers, semovita, sanitary pads, among others. Skye Bank partnered with two non- governmental organisations that have been working with the displaced people, Likeminds Initiative and Ombus Organisation, to achieve the feat.

Speaking during the distribution of the items to the beneficiaries, the Executive Director, Abuja and Northern Directorate of Skye Bank Plc, Mr. Idris Yakubu, said the bank staff took the noble initiative to positively affect the lives of the displaced people who have gone through tough times and trauma.

FCMB pledges support for export growth

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irst City Monument Bank (FCMB) Limited has pledged funding support to the growth of export trade business and the ongoing efforts of the government to diversify the Nigerian economy with focus on non-oil products.

The pledge was made by the Bank’s Executive Director, Business Development, Mr. Adam Nuru, at the Customer Forum on Export Trade with the theme, “Enhancing Capacity for Export Growth”, held in Lagos on Thursday, (November 5, 2015). The interactive and capacity building forum was organised by FCMB in partnership with the Nigerian Export Promotion Council (NEPC), Nigeria ExportImport Bank (NEXIM), Bank of Industry (BoI), National Agency for Food and Drug Administration and Control (NAFDAC), Nigeria Customs Service (NCS), Nigeria Agricultural Quarantine Services (NAQS), Federal Inspection Agency for Solid Minerals (FIASM).

Speaking at the forum, Mr. Nuru said that the Bank has created various windows of opportunity to assist Nigerian exporters benefit optimally from the exportation of products. He listed some of the offerings of the Bank in this regard to include pre and postshipment financing/ refinancing and discounting, provision of market information as well as advisory services.

The Executive Director explained that, ‘’the customer forum is another way we demonstrate just how much we value our customers. It is also an opportunity to inform the Market that we are truly on ground to support government and stakeholders in their efforts towards driving and growing export trade to boost non-oil revenue in the economy. Our alignment with the Nigerian Export Promotion Council and other sister agencies is a proof of the commitment to go the extra mile to contribute significantly towards the realisation of the business aspirations of our customers and that of the country’’.

Mr. Nuru urged exporters to ensure that products they export meet set the standards. so as to compete favourably in the international market as it would in turn, increase their income and have multiplier effect on the country.

Vanguard, MONDAY, NOVEMBER 9, 2015 — 33

Homes & Housing 28—Vanguard, MONDAY, NOVEMBER 9, 2015 Stories by YINKA KOLAWOLE

Wells Fargo to pay $81.6m mortgage settlement

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anaging Director of Federal Mortgage Bank of Nigeria, FMBN, Mr. Gimba Ya’u Kumo, has called for intervention in the housing sector through provision of affordable interest, and long-term finance for construction and mortgage in a bid to bridge the housing deficit in the country.

Ya’u Kumo noted that most Nigerians are unable to own houses due to high and unaffordable interest rate systems used by many mortgage institutions as well as lack of long-term finance for housing development and mortgages. “The housing gap is very wide, with deficits of 17 to 20 million units needed to address the housing needs of Nigerians.

For this to be achieved, there must be a serious intervention in the housing sector by way of affordable interest, and provision of long-term finance for both construction and mortgage, and thirdly, government introducing special taxes like tax holiday, amongst others,” he stated.

Meanwhile, about 105 naval personnel contributors to the National Housing Fund (NHF) is set to benefit from the mortgage scheme being managed by FMBN, in fulfilment of its mandate to facilitate home ownership in Nigeria. The FMBN boss who he led a management team on a courtesy visit to Defence Headquarters in Abuja, noted that the bank has already disbursed the sum of N471.922 million to about 86 naval personnel from the NHF contribution. He added that an additional N102.2 million already approved was being processed for disbursement to other contributors, while another N45.9 million was being processed for approval. He described the Nigerian Navy

W

Housej built with alternative technology

FMBN canvasses housing fund intervention Disburses N602m to Navy beneficiaries; partners Imo on 2,000 houses as one of FMBN’s strategic partners under the NHF scheme, adding that FMBN

There must be a serious intervention in the housing sector by way of affordable interest, and provision of long-term finance for both construction and mortgage

also provided NHF loans to civilian off-takers of the Naval Housing Estate in Kurudu.

In his response, Chief of Naval Staff, Vice Admiral Ibok-Ete Ekwe Ibas, called on FMBN to assist in bridging the 60 percent housing deficit existing in the organisation while pledging his readiness to support the bank towards achieving its goals.

In a related development, FMBN is partnering with the Imo State government to build more than 2000 housing units for workers in the state. The project which will be carried out by the under the Imo Model Scheme is expected to offer different categories of houses for its workers, ranging from semi-

detached duplexes and blocks of flats.

Governor Rochas Okorocha said the state government would provide about N10 billion, 60 percent of the cost, while FMBN would commit 40 percent to the project. He disclosed that FMBN would pay the developers and recover the money on behalf of the state government and itself. The first phase of the scheme will commence 1,000 housing units. In his own remark, Executive Director of FMBN, Charles Ajifa, said some housing units constructed already by the bank, would be handed over to state government soon, adding that state’s contribution to NHF has hit N1 billion.

Lamudi emphasises agents training to boost customer satisfaction

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igeria’s real estate portal, Lamudi marked its second anniversary of doing business both globally and in Nigeria last month, with a promise to focus on improving customer satisfaction by scaling up training of its agents.

At a press briefing to mark the anniversary, Lamudi Nigeria’s Managing Director, Mr. Obi Ejimofo, discussed the company’s C M Y K

exceptional growth in the Nigerian real estate market and also highlighted its focus for the coming year.

He noted that the company recently carried out a survey which measured its users’ impressions of the quality of their website, mobile application and search features of the platform.

According to him, over 90 percent of users polled voted favourably for the design of the website, while more than

80 percent of users surveyed indicated that they were pleased with the search and filter options of Lamudi’s online property platform. He further disclosed that survey revealed that 15 per cent of Lamudi’s site users believe the response time from its agents was poor necessitating the downsizing of the company’s agents from 7000 to 3000.

With innovative features such as Nigeria’s first toll-free

property hotline, Dial4Home, and its recent online mortgage calculator, Ejimofo said Lamudi has continually sought to make finding a dream home easier, quicker and more convenient for Nigerians. He however, noted that for the company to maintain its position as the nation’s leading real estate portal, it must pay special emphasis on providing quality customer solutions at every point.

ells Fargo Bank has agreed to pay $81.6 million in a settlement with the U.S. Justice Department over allegations it failed to provide homeowners with legally required notices, denying them the ability to challenge the accuracy of mortgage payments.

The Justice Department in a statement on Thursday said the settlement funds would go out to homeowners who were in bankruptcy between December 1, 2011 and March 31, 2015.

“We believe we have made the necessary investments and improvements in our systems and processes to ensure that payment change notices for the bankruptcy court and escrow analyses for customers in bankruptcy are properly prepared and delivered in a timely fashion,” stated Michael DeVito, executive vice president for Wells Fargo Home Mortgage. “We will work with the U.S. Trustee’s office and an independent reviewer to demonstrate the effectiveness of our improvements and to provide payments to customers, as required.”

US mortgage rates surge Fed rate hike fear

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ortgage rates in the US surged last week, according to the latest data released by Freddie Mac, after the Federal Reserve signalled that a December interest rate hike was a possibility. What the Fed does with interest rates doesn’t have a direct relationship to mortgage rates since they are more closely tied to long-term U.S. Treasury yields. Bonds are more likely to move ahead of a Fed action than in response to it.

The 30-year fixed-rate average jumped to 3.87 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) The 11basis point rise - a basis point is 0.01 percentage point – was the biggest one-week spike since June. The 30-year fixed rate was 3.76 percent a week ago and 4.02 percent a year ago. The 15-year fixed-rate average climbed to 3.09 percent with an average 0.6 point, rising above the 3 percent mark for the first time in three weeks. It was 2.98 percent a week ago and 3.21 percent a year ago.

34 — Vanguard, MONDAY, NOVEMBER 9, 2015

Economy

CBN in subtle quantitative easing  Banks lukewarm to prolending policy STORIES BY EMEKA ANAETO, ECONOMY EDITOR

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here were indications that Central Bank of Nigeria, CBN, may have silently effected a major shift in its monetary policy framework and liquidity policy following over seven weeks consistent high liquidity in the banking system curtesy of the apex bank.

Consequently, money market analysts dubbed the development a pseudo quantitative easing, QE, cycle aimed at propping up the economy through increased bank lending leverage.

QE is a monetary policy popularized in the United States of America recently where the monetary authority adopts a policy that increases money supply by flooding financial institutions with capital in an effort to promote increased lending.

As at close of financial trading last weekend banking system liquidity was N514 billion in excess with average liquidity balance of over N500 billion maintained in the past seven weeks relative to less than N200 billion preSeptember.

Consequently, borrowings of banks at the CBN discount window has been on consistent decline hitting N40.5 billion last week with a weekly average of N60 billion as against over N300 billion preSeptember.

The current robust levels of liquidity in the system have resulted in money market rates reaching year low levels.

At the close of trading last weekend the Open Buy Back, OBB, and the Overnight funds, O/N, rate had hit a new low of the year at 0.6 per cent

and 1.0 per cent respectively.

The rates are now on average of less than 2.0 per cent in the past seven weeks, contrary to over 10 per cent prevailing before mid September.

With this crash in interbank rates amid excess liquidity, CBN’s easing policy was aiming at getting the banks push their excess cash into lending to the private sector for productive purposes, but instead the banks are pushing the excess resources into monetary instrument such as sovereign bonds, considered riskless.

Consequently, despite crash in yields in the bonds market induced by CBN policy and excess liquidity, banks buoyed activity in bonds market with total value of bonds traded put at weekly average of N400 billion as against N200 billion pre-September 2015, a development which has forced a yields decline massively.

The bullish run was stretched into the last trading day of last week as average yields across all tenors further declined 207 points leading to further crash in average yield across all trading instruments to 11.1 per cent, the lowest so far.

Commenting on this development financial analysts at Afrinvest Group said ‘’given the current liquidity levels in the system, the bond market is expected to remain bullish as investors continue to search for viable opportunities in the fixed income space”.

The only liquidity restraint over the last seven weeks has been the foreign exchange weekly auction which sucks in significant proportion of the liquidity while still leaving over 80 per cent circulating in the system.

Principally CBN liquidity boost over the period came

from repayment of maturing Treasury Bills without reissue of fresh ones as it had always done up until mid-September 2015.

Also the regular inflow of huge cash from the Federation Account Allocation Committee, FAAC, have continued without corresponding mop up measures CBN usually do.

According to analysts at Nairametrics, a Lagos based financial information house, “after completely ruling out the devaluation of the currency, the CBN is finding that it has fewer options in its arsenal to spur growth in the economy.

Its most recent trick is to cause a flush in banking sector liquidity by staying out of the market, when it previously intervened to mop up liquidity”.

“CBN has taken an easing stance, it has reduced cash reserve requirement from 31 percent to 25 percent, to enable banks have more funds to lend to the economy (this more than offset the debit from the system due to the TSA implementation).

“CBN also did not roll-over its Open Market Operation (OMO) program in the recent past week. It did not mop-up extra liquidity from the

banking system, and banks could now be stuck with piles of cash that they have to find uses for. ‘’Interest rates across the money market and government debt market have taken a plunge in recent days, showing the extent of the new high levels of liquidity in the system”.

According to analysts at CSL Securities, “the CBN is trying out this new and experimental variant of Quantitative Easing to spur lending to the real sector to avert growth decline.

“But with the new liquidity, banks are increasing their demand for paper securities like bonds rather than increase lending to the real sector (at least for now). Bond prices have been bid up in the process due to the increase in demand from banks.

“It seems that the reason for this is that banks have not been assured of the surefootedness of this policy, given the penchant of the central bank for policy flip flops. Hence they are waiting to see how long this new liquidity drive will last”.

Cumbersome procedures, hidden charges depress lending

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esult of a survey by Afrinvest (West Africa) Limited, a Lagos based financial investment house, has indicated that high interest rate on loans, complicated and long processes as well as hidden charges are major causes of low access to bank credit in Nigeria.

Central Bank of Nigeria, CBN, in recent times has been trying to encourage the banks to increase lending to the private sector and play less on channeling their funds to investment securities.

In its report, Afrinvest Survey on Nigerian Banking Experience 2015, the company said “most respondents in our list (52 per cent) agreed that loan application processes can be very tiresome and not encouraging while 56.3 per cent also noted that interest rates charged on loans come with hidden charges”.

The company also said that it attributes part of the problem to high interest rate as deducible from the responses of those who enjoyed one form of loan or the other.

Commenting on the overall responses the company said “we recognize the fact that most of the banks put in place thorough process to ascertain the credit worthiness of their customers as well as build effective risk management procedures.

Nothwithstanding, we believe the process can be made more transparent and less cumbersome.

“Also, it is our view that higher effective interest rate on loans is against the backdrop of regulatory tightening particularly around cash reserve requirement. A gradual easing of monetary policy conditions by the CBN should be considered which is in line with the agenda of the current Governor. This will creditably ensure lower pricing of risks assets and also foster better access by bank customers”.

The survey also indicated that bank customers who participated in the survey have varying opinions with regards to cost of their banking transactions.

According to the report “majority of the respondents (70.6 per cent) agree to the question that the fees they are charged by their banks are unreasonably high though majority (56.4 per cent) also noted that this reason is not sufficient for them to change their banks.

Vanguard, MONDAY, NOVEMBER 9, 2015 — 35

36 — Vanguard, MONDAY, NOVEMBER 9, 2015

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edia reports, from both local and foreign sources, have lately suggested that MTN, arguably, Africa’s largest mobile telephone network, may be confronting possibly, the greatest threat since its inception and its bountiful global success, particularly, in their Nigerian operations where they have over 62million registered subscribers. However, the mobile conglomerate’s well laid apple cart, presently appears threatened, by a $5.2bn fine imposed by Nigeria’s National C o m m u n i c a t i o n s Commission(NCC) for its failure to deactivate over 5million of its registered subscribers, whose biodata were not captured as mandated by the regulatory body.

The NCC has set the deadline for MTN to pay off the fine for November 16, 2015.

The news of the sanction quickly shaved over 25 percent off the multi-national corporation’s market value of over $25bn on the Johannesburg Stock Exchange; furthermore, trading on MTN stocks, was also temporarily suspended at the JSE to protect it from a free fall. Regrettably, when the dust settles, investors may have lost billions of dollars, with unpleasant individual and corporate consequences, because of this clearly back breaking fine.

In the light of the above circumstances, it is not surprising therefore, that NCC’s sanction of MTN was condemned, particularly in the foreign media. It is alleged that the fine is disproportionate to the offence, and worse still, it is speculated that its payment may ultimately wipe out over 2years of MTN’s annual profit; in a worst case scenario, there are fears that the company may go down, with potentially similar, socially destabilizing consequences for erstwhile shareholders and employees,

Is MTN a victim of regulatory overkill? including tens of thousands of Nigerians who make a living from its operations; conversely, however, hardliners may suggest that in such a vibrant market, any inheritor of the MTN business will quickly absorb the casualties of the erstwhile market leader ’s demise.

There is, however, the danger that foreign investors, particularly, would hesitate to bring their money to our country, for fear that they could equally become victims of similar draconian regulations.

Consequently, some critics may argue, that Nigeria’s economy and employment potential would be the ultimate losers if foreign investors stayed away.

Interestingly, although, there are some favourable comments by some journalists and analysts in the media, there is so far, clearly no significant overt overwhelming public sympathy, for the MTN cause; cynics may suggest that millions of disgruntled subscribers probably support the fine as payback time for the shabby services they have had to, helplessly, endure for so long from mobile phone operators in Nigeria.

Nonetheless, the question that however inevitably pops up, is why such negative attention is focused on MTN, as nothing so far suggests that the other major telecom operators also blatantly disregarded the NCC’s directive, to deactivate subscribers without Biometric verification since August 2015.

Conversely, could it be that the other mobile networks took the issue more seriously and therefore recorded ‘minimal’ default on their subscriber base?

Furthermore, there was no reported call by any of the operators for the need for

additional time extension on the Biometric exercise, so, the question is, why did MTN fail, big time, to respect the Sector Regulator’s policy directive?

Clearly, the failure to deactivate over 5million lines without related biodata may not easily be explained away as the result of the proverbial printer’s devil; the question is, did the MTN itself bring the notice of its failure to the attention of the NCC when it eventually discovered its default or did the NCC independently confront the company with incontrovertible evidence of their ‘crime’?

Furthermore, even if MTN

There is... danger that foreign investors, particularly, would hesitate to bring their money to our country, for fear that they could equally become victims of similar draconian regulations claims that its poor compliance was not deliberate, was there, nonetheless, a commercial or revenue advantage that accrued from the omission of over 5million active subscribers from its biometric verification, i.e. was there an intention to defraud government of

revenue on the part of MTN? Finally, what pro-active steps have been taken, so far by the telephone company to resolve the issue to mutual satisfaction.

Ironically, other phone companies who may have already paid the mandatory N200,000 fine per person for not deactivating subscribers without biodata verification, may feel cheated if MTN’s penalty is subsequently, inequitably reduced on completion of the reported ongoing negotiations between the parties. Incidentally, MTN has, not yet, proclaimed its innocence on the alleged violation of NCC’s directive in any public statement; neither has it claimed ignorance of the security implications for police investigations of its failure to deactivate related subscribers; so the question is, why did MTN disregard the Regulator ’s very clear guidelines so brazenly?

The NCC presumably set the penalty for infraction so high, so as to encourage full compliance with its directive rather than as a covert strategy designed to fleece mobile operators. Besides, the penalty has not been decried, as retroactive by any one; so, in view of the prevailing social culture of impunity, did MTN expect they could get away with breaking the law, knowing full well the severe implications of a default of such magnitude on their credibility and their operations.

A $5bn fine is obviously no chicken change, but it is certainly not unusual, as billions more are paid for serious regulatory infractions in older, more successful economies where sentiment is no defense against the letters of the law. There is often the undeniable popular suspicion

of the great promise of economic development and job creation that transcontinental investors bring to Africa; some reports have, however, suggested that significantly more funds flow out of Africa each year through myriad financial instruments than the actual inflow of real foreign direct investment and various aid interventions.

Nonetheless, despite their pervasive presence, their enviable corporate success, and the numerous social interventions and billions of Naira paid as taxes over the years, MTN is probably still not integrated in popular consciousness as a Nigerian company; it is possible that a public listing in the Nigerian stock Exchange may enhance its local image; certainly, the voices of Shareholder Associations would have been more resonant in the defence of the company if they had a stake to protect in such circumstances.

Foreign investors are definitely welcome in Nigeria but they must respect our laws and respect our institutions; in the same manner, Nigerian companies operating abroad will also be expected to abide with the rule of law in their host countries.

Clearly, if the NCC refuses to reduce the burden of MTN’s $5.2bn penalty, foreign direct investors will be served a strong signal that the Nigerian Administration has zero tolerance for any breach of our laws; conversely, a waiver of any kind to MTN may encourage other corporations to further disregard the provisions of our laws and violate our national interest with impunity.

SAVE THE NAIRA! SAVE NIGERIANS

Business & Economy

Nigeria plans rice, wheat selfsufficiency in 3 years N

igeria aims to be selfsufficient in both rice and wheat production within three years, a document by President Muhammadu Buhari’s administration seen

by Reuters showed a massive undertaking given current production levels.

The policy document was circulated among Buhari’s ministers-designate, whose portfolios are yet to be announced, on a two-day retreat. It also proposes overhauling the mining sector, including efforts to “ensure local and foreign investment” in the industry.

However, the five-page document did not provide details of how the administration would fund the planned changes in Africa’s biggest economy, which has seen a slowdown in growth.

Buhari has previously stated long-term plans to encourage local manufacturing in Africa’s largest oil producer, which has been hit by a fall in global crude prices. “Self-sufficiency in rice production within 24 months” and “self-sufficiency in wheat production within 26 months” are goals in the agriculture section of the document, which also calls for

“market guarantees for farm produce”. About 3 million tonnes of rice was produced in Nigeria last year, along with 64,000 tonnes of wheat, United States Department of Agriculture (USDA) figures show. Nigeria is the world’s second largest importer of rice and among the biggest buyers of U.S. wheat. In 2012 it imported 2.3 million tonnes of rice - a record high, say U.N. statistics which also show some 4.1 million tonnes of wheat was brought into Nigeria in the same year nearly double the amount imported in 2000.

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