Financial vanguard 11042016

APRIL 11, 2016

FRC, shareholders poised for war over audit committee chair … Audit committee chair must be professional accountant — FRC … It’s not necessary, shareholders declare, demand reversal

By NKIRUKA NNOROM

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rouble is brewing between the Financial Reporting Council (FRC) and notable shareholder groups in the country over a draft rule

by FRC spelling out the qualification individuals aspiring to the position of audit committee chairmen of quoted companies must possess.

FRC in the draft rule directed that such persons must be members of certified professional accounting body in the country. The Council based its argument on the premise that

professional accountants are more reliable, saying that their education and training allow for their judgment to be relied upon.

However, leaders of renowned shareholder groups have frowned at the guideline, which they describe as unnecessary and called for immediate reversal. According to them, the FRC rules is in contravention of section 359(3) and (6) of Companies and Allied Matters Act, Cap. C20.

Controversial rule/guideline The draft rule contained in a circular

titled “Transitional Concessions Agreed between the Nigerian Stock Exchange (NSE) and the Financial Reporting Council of Nigeria (FRC) regarding Rules 1& 2 of the FRC’s Rules” published by the NSE on March 29, 2016, with reference no:NSE/ LARD/LRD/CIR5/16/03/29, states thus: “Chairman of audit committee, to annual report, financial statements, accounts, financial report, returns and other documents of a financial nature, shall be a professional member of an accounting body established by Act of the National Assembly in Nigeria.”

VISIT - From Left: Mr Tony Agenmonmen, 1st Vice President &Vice Chairman National Institute of Marketing of Nigeria (NIMN), Mr Yaw Nsarkoh, Managing Director, Unilever Nigeria plc, Mr Ganiyu Koledoye, President & Chairman of Governing Council, NIMN and; Mrs Nsima Ogedi-Alakwe, Brand Building Director, Foods Unilever Nigeria Plc, during a courtesy visit by executive members of NIMN to Unilever Head Office in Lagos.

PHOTO: Kehinde Gbadamosi

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It, however, states that current chairman of the audit committee shall be permitted to attest to accounts of financial nature regardless of whether he is a professional member of an accounting body or not for the current financial year only.

The FRC added in the circular that "The foregoing concessionary arrangement shall apply only to entities which in the case of a holding company shall include its subsidiaries): (i) Which are not currently in court with the FRC and/or having any of its director(s) currently holding FRCN numbers that have been suspended by the FRC. Every subsequent annual report, financial statements, accounts, financial report, returns and other documents of a financial nature of the audit committee shall be attested to by a chairman who is a professional member of an accounting body established by Act of National Assembly in Nigeria in compliance with FRC Rule 2.”

Again, the FRC in its ACT No. 6 2011 expressly reaffirmed the above position on qualification of audit committee chairman, warning that certifications that do not comply with the Council’s pronouncement shall be deemed as non-compliance with its rule and capable of rendering the financial statements misleading. “Appropriate penalties as provided for in the FRC Act, 2011 and the FRC Guidelines/ Regulations for Inspection and Monitoring of Reporting Entities 2014 shall apply,” it warned.

Provisions of CAMA Relevant sections of Companies and Allied Matters Act - Section 359 (3 & 4), that relate to qualification and experience of audit committee Continues on page 18

18 — Vanguard, MONDAY, APRIL 11, 2016

Cover

Turning great Ideas into great money

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COLLOQUIUM - From left: Principal Partner, Technique Loss Adjusters Limited, Mr. Ralph Opara; Deputy President, Nigerian British Chamber of Commerce (NBCC), Mr. Akin Olawore; Chairman, Nigerian Insurers Association and Managing Director, Linkage Assurance Plc, Mr. Gus Wiggle; Director –General NBCC, Mrs. Joyce Akpata and Director–General Chartered Insurance Institute of Nigeria, Mr. Rola Ahmed at the NBCC’s Nigerian Insurance industry Colloquium in Lagos.

FRC, shareholders poised for war over audit committee chair Continued from page 17 members, including the chairman provide that: The chairman of the audit committee should be a nonexecutive director, to be nominated by the members of the audit committee.

Basically, members of the committee should be able to read and understand basic financial statements, and should be capable of making valuable contributions to the committee. Moreso, members of the committee should possess a thorough understanding of the company ’s business, its products and services, a reasonable knowledge of the risks facing the company and the essential controls the company has in place, inquisitiveness and dependable judgment and ability to offer new or different perspectives and constructive suggestions.

Like any non-executive director, audit committee members should (at least as a group) possess a wide range of knowledge, skills and personal attributes: sound judgment; integrity and high ethical standards; strong interpersonal skills; and the ability and willingness to challenge and probe.

Specifically, audit committee members must be able to understand the rules and, more importantly, the principles that underpin the preparation of financial statements.

Shareholders agitate In his reaction, Mr. Boniface

Okezie, Chairman, Progressive Shareholders Association of Nigeria (PSAN) insisted that a shareholder need not possess any accounting qualification as adduced by FRC to sit as chairman of audit committee, arguing that no requirement like being an ICAN member was attached as pre-conditions to buy shares.

He said: “FRC has no legal backing to say that shareholders should not be audit committee except they are ICAN qualified. That means you must be chartered accountant before you can serve in audit committee. We say no because that law is alien as far we are concerned.

Nobody told shareholders that before you buy can shares, you must possess a degree; you must be an accountant or an engineer before you buy into

Like any nonexecutive director, audit committee members should (at least as a group) possess a wide range of knowledge, skills and personal attributes

a company.

“The law says that shareholders should nominate two or three members to contest in audit committee in any quoted company, while the directors should nominate their own members. And all the directors nominated in the committee must not be chartered accountants. They can be from any profession.

The requirement is that audit committee members should be able to read and write. The audit committee is not auditing account; they are looking at what the auditors, who are accountants, have done. They are reviewing what the auditors have done; they are looking at reports written by management.

It is the audit committee that ensures that the recommendations made by the auditors to the management team are enforced; that is basically what they do. In terms of looking at figures, they can liaise with the auditors who are paid to audit the figures.”

Continuing, he said: “So, what kind of law is Financial Reporting Council making. We rely on CAMA and FRC cannot make any law for us.

Any law today governing shareholders activity is made

by CAMA. The law of CAMA stipulates that if you can read and write and interpret figure, you can be audit committee members. That’s all!

So, this law that is being proposed by the FRC should be discarded; we will fight it at the court of law. It has no Continues on page 19

aving a great business idea is only the first step in the journey to raising your business empire. Turning your business idea into a moneymaking venture requires raising the capital necessary to get your blessing running and that represents the next step of thousands of other steps. In starting your own business, the most challenging task you have to face as an entrepreneur is raising money as capital.

The ability to raise money to start a business is one of the tests you must undergo as an entrepreneur. As daunting as it may seem, the challenge of raising money is not as tough as you think. It is no secret that in your quest to raise money to start your business you are bound to face a lot of obstacles.

It would be very unfair of me to promise you otherwise.

However, the good news is that it can be done as there are some people, some institutions and some organisations willing to look at investing in start – up businesses.

There are many tried and tested ways of raising money to start your business which have been used by many famous entrepreneurs whose businesses have become household names, including Bill Gates (Microsoft), Michael Dell (Dell computers) and Richard Branson (Virgin), to name a few. For maximum success, you would do well to use a combination of different tactics to employ when you want to raise capital for your great business idea.

Using feasibility business Ideas The first and basic key to raising money is to have a business idea that is feasible, that is practicable, and that is workable. You wonder why? The first question any investor you approach will ask is this: How profitable is your business idea?

That is because no investor will want to put his money in a business that is impossible and not viable. They will also want to know the expected return on their investment and the time frame within which to recoup their initial investment. Before you embark on a quest to raise money, carry out a feasibility study to determine the profitability of your business

idea.

Using a business plan Another prerequisite in the process of raising money for your business idea is a good business plan. One of your first moves when you want to source for funds to start your business should be to put a comprehensive business plan.

Your business plan will include details of your background, education, training experience and any other personal qualities you possess. Your personal qualities and experience are often regarded as assets to your business.

Your business plan should also explain in detail the modalities of how you are going to use the money you need.

It should also explain in detail your proposed business idea, associated expenditure, the market research undertaken, and your financial projection and so on. Above all, your business plan should describe in detail what makes your business differs from that of your competitors. What will interest your investors the most about your business plan should state precisely what any investor should expect as returns on their investments and also, when and how you are going to pay it.

Personality, Appearance and presentation style Next thing to consider is your personality, your appearance and your presentation style. When approaching an investor, remember you have only a chance to create an impression in his or her mind.Therefore,you must be conscious of your appearance, don’t appear rough and unkempt and, please, try to look professional. In the game of raising money for your business, appearance matters a lot.

Now to your presentation style: your manner of presentation will determine the success or failure of your quest to raise money for your business idea to your investors with a high level of confidence, because the better you are at communicating your strengths to them, the better your chances of raising money.

If you lack communication skills, read up books on the topic.

Vanguard, MONDAY, APRIL 11, 2016 — 19

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ne news item in the international wire service last week caught my attention.

It is the fact that the United States of America has turned again to Nigeria for crude oil. The new twist in the US quest for Nigerian oil is coming on the heels of the slow down in shale oil fracking in the US. The US oil production has fallen by about 600,000 barrels a day since peaking in 2015, and imports have filled the gap.

The news looks cheering going by the fact that several tons of Nigerian crude have been on the high sea looking for buyers. According to the report, refineries along the US coasts are choosing to buy imports instead of local crude. “One of the biggest winners is Nigeria, which is regaining lost market share. Imports from Nigeria surged to 559,000 barrels a day in mid-March, compared with an average of 52,000 for all of 2015.

The opening up of the US market is giving Nigeria a new beginning with the US in oil trade. However, it is because the price of crude has dropped so low that it is no longer profitable for the US shale producers to continue in business. The current price of crude has made oil recovery from shale far more expensive than imported oil.

The question is: will this bring relief to Nigeria's dwindling revenue? Perhaps, in the last few years, Angolan crude has been finding it easier to attract buying interest than the light sweet and better quality Nigerian crude, which, until a few years ago, was the preferred choice for most refiners. But it is not only due to higher prices and economics that Nigerian crudes are struggling; a lot has to do with the customer base of both countries. “Angolan crudes rely on countries that are growing at a rate of 5 per cent to 8 per cent while crudes out of Nigeria rely heavily on Europe, where economies are generally on a decline.”

It must have been giving Nigeria's oil authority a nightmare that the country’s export crude cargoes every month are grappling to attract end-users and refinery demand, and are instead being stored on ships and on storage terminals, idling away. It is said that bulk of the oversupply in

US importing Nigeria crude oil again? the Atlantic Basin crude market is comprised more of Nigerian crudes. What is further worrisome is the fact that a lot of Nigerian crude had been floating on the seas and in storage tanks with no home and no destination. But with the US now buying an average of 559,000 barrel per day, Nigeria can now have a respite.

As a result of the boom in shale oil that the US experienced in the last few years and the crash in crude oil prices, the US Senate lifted its embargo on oil export. In the three months since the U.S. lifted its 40-year ban on crude oil exports, rather than flooding global markets, U.S. crude shipments to foreign buyers have stalled. At the same time, imports into the U.S. jumped to a three-year high in what looks to be a reversal of a year-long decline in the amount of foreign crude brought into the American market.

According to Bloomberg report, “As of March 25, the four-week average of imports was running at 7.9 million barrels a day, 9.8 per cent higher than the year before.

“That’s not a one-week blip,” says Tim Evans, an energy analyst at Citi Futures. “We’re seeing a consistent pattern.”

As it tuned out, the US producers, who reaped the benefits of the shale revolution,

no longer enjoy a steep price advantage over foreign rivals in selling to domestic refiners.

Production has fallen by about 600,000 barrels a day from its peak of 9.6 million in 2015.

Curiously, almost the 600,000 barrels shortfall from US local production is now being imported from Nigeria. At the moment, refineries are buying foreign oil to replace the lost U.S. output—and, along with traders, are storing much of the less-expensive imported oil to sell when prices rise.

According to Bloomberg, “During the early years of the U.S. shale boom, millions of barrels of light, sweet crude had one big problem: no affordable

Return of the US to buying Nigerian crude will ensure that there is a ready market for Nigeria; the NNPC had better take this chance seriously

access to refiners on the coasts of Texas and Louisiana. To tap into the cheaper oil pooling in Oklahoma, pipelines that used to bring imported oil up from the Gulf were reversed to take shale oil down to the coast.

Refiners in Philadelphia and New Jersey also began buying North Dakota crude instead of foreign oil, moving it by train across the country. By October 2014, U.S. imports had fallen by about 40 per cent from a high in 2006.

“Analysts say that West Texas Intermediate crude has to be $3 to $5 cheaper than imported oil to pay for those pipeline and transportation costs. From 2011 to 2014, U.S. oil was on average $12.61 cheaper than equivalent foreign oil. The discount slowly narrowed as pipeline projects were completed and U.S. crude began to flow more freely from the middle of the country down to the Gulf Coast.

“A week before the US Senate approved lifting the export ban on December 18, WTI traded around $3 below Brent. Over the next month, the discount disappeared, and, for the first time in six years, WTI traded at a premium to Brent for a few days in January. WTI is now less than a dollar cheaper than foreign barrels available on the Gulf Coast.

The irony of the shale boom, and all the light crude it unlocked, is that it came just as

U.S. refiners were spending billions to process heavy oil. “In theory, there was always going to be a linkage between freeing up U.S. barrels and replacing them with foreign crude that U.S. refiners are better suited to run,” says Kevin Book, managing director at ClearView Energy Partners.

“For some of the weakest U.S. producers with the highest costs, lifting the ban didn’t matter because they can’t compete on the global market, says Abudi Zein, co-founder of ClipperData, which uses customs data and ship-tracking information to estimate global oil flows. For U.S. producers with the highest costs, “they’ll never be able to export because all of a sudden, they ’re competing with Saudi Arabia and Iraq.”

The U.S. is hoarding a lot of the imported oil. As of March 25, U.S. commercial crude inventories hit 534 million barrels. That’s near the all-time high in 1929, when U.S. commercial storage hit 545 million barrels, as huge oil finds coincided with the beginning of the Great Depression. Today, with oil so cheap, producers and traders are opting to wait for prices to rise instead of selling, especially with the futures market signaling that oil prices will rise. Traders can lock in those prices by taking out a contract for delivery a few months down the road”.

How this will help Nigeria shore up its dwindling revenue is not yet clear. But one thing is certain, return of the US to buying Nigerian crude will ensure that there is a ready market for Nigeria. The NNPC had better take this chance seriously.

Cover Story FRC, shareholders poised for war over audit committee chair Continued from page 18 power.” He, therefore, called on the presidency to reconstitute the Board of FRC, saying that it cannot continue to be run as a one-man-show.

Corroborating his views, Sir Sunny Nwosu, National Coordinator, Independent shareholders Association of Nigeria (ISAN) said that the rule is uncalled for and threatened to sue the Council at the expiration of two weeks ultimatum already handed out to it.

“There is difference between rules and laws and where there is clash, the law overrides the

rule,” he said, adding that provisions of the Companies and Allied Matters Act (CAMA) supersede FRC regulation and as such the Council should reverse the regulation which he said runs contrary to CAMA requirements.

“Audit committee is a law by CAMA; therefore, they should allow the audit committee to appoint its own chairman. We will take action. Already, we have written them and we have given them 14 days to rescind that. If they don’t, we shall be in court,” he declared.

He added: “If accountants in Nigeria have become jobless

and need job, they should look elsewhere and not audit committee job.”

Contributing, DR. Farouk Umar, President, Association for the Advancement of the Rights of Nigerian Shareholders, regretted that FRC recently rejected the appointment of very knowledgeable shareholder (who can dissect financial accounts) from serving as chairman of an audit committee on account of the new rule.

Expressing disappointment with the rule, Umar said: “you don’t need to be an accountant to read and understand a financial statement. We reject

the rule in its entirety and will head to court if the rule is not

changed.”

UNVEILING - From left: Mr Segun Macaulay, Vice-President, Sales and Distribution; Nitin Anard, Vice-President, Data and Digital Services and Adefemi Adeniran, Head, Public Relations, at the unveiling of Airtel Smart Speedo in Lagos.

20 — Vanguard, MONDAY, APRIL 11, 2016

Business & Economy

Nigeria facing image problems over fuel crisis, others — FG

By MICHAEL EBOH

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he Federal Government has stated that the myriad of problems currently facing the country is creating an image problem for the country.

Permanent Secretary, Ministry of Information and Culture, Mrs. Ayotunde Adesugba, who stated this at the monthly meeting of the Nigeria Institute of Public Relations, NIPR and launch of the Institutes monthly newsletter, lamented that the fuel crisis and other economic challenges are denting the image of the country.

Adetugba, who was represented by the Director, Information and Communication Technology (ICT), Mrs. Veronica Adeyemo, called on professionals, such as the NIPR to always remember the country in their deliberations and engagement so as help lift the country from these problems.

She tasked the NIPR, as well as other professional associations, to proffer solutions to salvaging the country ’s image and in solving the problems confronting the country.

In his response, Mr. Tayo Haastrup, Chairman NIPR, Capital City Chapter, Abuja, promised to support the government in projecting a positive image for Nigeria.

According to him, the NIPR would introduce programmes and policies that would support the efforts of President Muhammadu Buhari to present a positive image of the country both locally and internationally.

He said, “We need a national conference on national integration, and what the present government is doing would be a very good direction for anybody to support. Image laundering and policies are very important.

“Let me also tell you that the Buhari is already helping us in the aspect of image laundering. He is a man of integrity; he is a man that developed countries believe in, and you can see him travelling here and there; there are receiving him very well. This is the number one citizen that is already helping us to launch and launder our image all over the world.

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UNVEILING - From left: Dr Olatunde Aworanti, Registrar/CEO, NABTEB; Dr Doyin Salami, Guest Speaker; Mr Kunle Akinniran, Managing Director, Vatebra; Mr Mike Aigbe, Deputy Maaging Director and Dr Iyi Uwadia, Registrar, West African Examination Council, WAEC during the unveiling of new name for Fleet Technologies Company as Vatebra in Lagos. Photo Lamidi Bamidele.

CBN averts closure of 200 manufacturing firms through forex access

BY FRANKLIN ALLI

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he Central Bank of Nigeria, CBN, has averted the closure of over 200 companies in the manufacturing sector of the economy through its recent allocation of foreign exchange to the affected industries to bring in their raw materials.

Recall that the apex bank had in a bid to stabilise the exchange rate, in protection of foreign reserves, following oil price decline, excluded 41 products from access to the foreign exchange market (interbank foreign exchange market and Bureau de Change).

This led to inability of some

manufactures to sustain production due to lack of Forex to import raw materials C o n s e q u e n t l y , Manufacturers Association of Nigeria cried out three months ago that if the dollar scarcity persists, an estimated 200 of its members out of the 1,600 surviving companies would close down their operations by the end of the first quarter of 2016.

With the first quarter over, Dr. Frank Jacobs, MAN President, said: “The good news is that CBN has started allocating forex to manufacturers. Thought, it is not exactly what we want but it is better than none. Some weeks ago, we had challenge in getting some forex, so I

had a meeting with the CBN Governor, Godwin Emefiele.

“At the meeting, he promised that he was going to make sure that manufacturers' requirements are met although he said he cannot guarantee their requirements will be met 100 per cent. After the meeting with the CBN Governor, I met with MAN members and conveyed the message that their requests are being attended to and they are happy that although that is not exactly what they want but that they are happy that something is happening. I am very happy about where we are today and we hope the CBN will sustain that effort,” he said.

According to him, it was the outcome of their public outcry that led the CBN Governor to have a meeting with “’Me. When he saw the reports, we discussed at length and he promised that he would ensure that manufacturers’ requirements are met.”

Fielding question on the way forward, he noted: “Yes, the way forward is we are happy at present our requirements are being met, and our prayer is that it should be sustained so that we can together grow the economy.

He stressed that although, the current allocation of forex to manufacturers is not able to satisfy their demand 100 per cent, but at least it is better than nothing.

“We are happy that at least CBN is sensitive to our needs now even though they are not able to give us 100 per cent access pending the time when the forex improves, and when the price of oil goes up and foreign reserve improves.

Like Oliver Twist, in order to satisfy our raw materials requirement, actually, we want hundred per cent of the requirements because when you apply for $100,000 but you were given $50,000 dollars, it means that your production is going to be cut into half and cutting your production into half would mean that you won’t be able to work the numbers of hours you are supposed to work in a day.

That is why we are hoping that with time they should be able to give us everything we want. So we are happy that something is coming that when nothing was coming at all. He disclosed that in order to cut down on dependence on imported raw materials for production, MAN is in discussion with the Raw Materials Research and Development Council, RMRDC.

IFRS: ICAN certifies more members

BY PROVIDENCE OBUH

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he Institute of Chartered Accountants of Nigeria (ICAN) has certified about 30 members with the International Financial Reporting Standards (IFRS) Certification More so, 15 members were certified for the Forensic Accountant of Nigeria and Financial and Information Technology Consultant respectively.

Speaking at the occasion of the Faculties Joint Induction Ceremonies for the 2015 Forensic Accounting; IFRS and Consultancy and Information Technology Certification training programmes, ICAN President, Otunba Olufemi Deru, said that the Faculties were created by the Council in 2001 as part of strategies to address the postqualification specialisation needs of members in response to market demand.

According to him, “Over the years, the institute has been producing chartered accountants who have diverse competencies in the practice of audit, taxation, insolvency,

corporate finance, financial advisory services, secretariat services, public finance, information technology amongst others.

“However, developments in the market place now point to the need for specialists in these various areas of accountancy. The advent of globalisation and the revolution in information technology have significantly altered the traditional mode of accounting processes and by extension, the pace, mode and the service delivery by chartered accountants.

“The challenges imposed on players in the economy by these complex changes have invariably increased the premium placed on the skills and competences of chartered accountants resulting in the expansion of their responsibilities beyond the traditional attestation functions.

“It was in response to these dynamics, the resulting market preference for specialists and the need for post-qualification by members that about seven faculties were created by the Council,” he said.

Deru charged the inductees to continue to fly the profession’s flag

of honesty, integrity and excellence with distinction in their respective spheres of influence, no matter the odds.

“This noble Institute, in my view, has pioneered various initiatives and made remarkable progress in various fields both locally and internationally by leveraging on the expertise and ingenuity of its members.

“Therefore, except you continue to demonstrate these great ideals and thrive on the virtues of your profession through exemplary conduct, we cannot legitimately claim to be the conscience of the nation,” he said.

In his remark, Chairman, Board of Audit, Investigation and Forensic Accounting Faculty, Mr. Francis Medessou, said that there is a need for more accountants due to the rise in economic and financial crimes in the nation.

“There is a need for more chartered accountants especially those trained as forensic accountants with skills to investigate financial crime and produce reliable and credible reports with which they will report the evidence that will facilitate judicial decisions on matters of fraud and financial and economic crimes.”

Vanguard, MONDAY, APRIL 11, 2016 — 21

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22 — Vanguard, MONDAY, APRIL 11, 2016

Banking & Finance

Ecobank to drive efficiency, financial inclusion with technology

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he Managing Director, Ecobank Nigeria, Charles Kie, has disclosed that the bank will adopt top of the range banking technology to push its market penetration strategy to become one of the top three Nigerian banks in the next three years. Mr. Kie who assumed leadership of Ecobank Nigeria in January said rather than build new branches the bank would continue to deploy its state of the art technology including social media, analytics, and cloud, among others to reach every segment of the Nigerian population.

Kie, who was speaking to newsmen in Lagos, maintained that the best means to achieve penetration of financial services is not by branch network but robust technology through alternative channels.

According to the Ecobank Managing Director, the bank has no plans to embark on branch expansion or merger and acquisition to achieve financial inclusion in Nigeria.

Chamsmobile, Skye Bank partner on egift payment

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ISA eGift payment card has been launched by ChamsMobile, a licensed Mobile Money Operator in Nigeria, in partnership with Skye Bank Plc. It is an online VISA card, which ChamsMobile Kegow subscribers can send by mobile phone. The eGift card follows the successful introduction of Kegow’s virtual VISA card in August 2015, the first of its kind in the Nigerian market.

The eGift card works exactly the same way, but is mainly for sending monetised gifts to family, friends, business associates etc., in order to eliminate the stress and worry of what to buy for them on special occasions. It is an entirely digital payment card for online and mobile use, locally and internationally and is unique in that recipients get a full picture of the Virtual eGift Card on their mobile screen, PC, or tablet.

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COMPETITION - From left, Group Head, Proposition & Products, Sterling Bank Plc, Adewale Akinrinde; Principal Consultant, Wiseplanner Consulting, Sam Omole; Group Head, Digital & Transaction Banking, Sterling Bank Plc, Olugbenga Adams; Chief Consultant, HT Limited, Feyikemi Odunuga, and Group Head, Strategy & Communications, Shina Atilola, at the presentation of the finalists/contestants in the “Meet The Executive” Business Plan competition organized by the Bank in Lagos.

Investors demand for N2trn government securities in March STORIES BY BABAJIDE KOMOLAFE

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nvestors demanded for N2 trillion worth of government securities in March, reflecting the level of idle funds (excess liquidity) in the banking system.

Analysis of trading in government securities, also known as treasury bills, for the month of March revealed that the amount offered by the Central Bank rose by 31 per cent to N762 billion from N584 billion in February.

Demand by investors, or public subscription, rose by 35 per cent to N2.09 trillion, while the amount sold rose marginally by 0.8 per cent to N902 billion from N894 billion. However, the amount of treasury bills (TBs) repaid by the CBN dropped by 21 per cent to N512 billion from N644 billion Further analysis revealed that investors showed that while demand for freshly issued TBs, also known as Primar y Market Auction (PMA) rose during the

month, demand for existing TBs also know as Open Market Operation (OMO) declined.

Demand for OMO bills dropped by 14 percent to N543 billion from N631 billion in February. The amount offered and sold by the apex bank also dropped by 25 percent and 43 percent respectively to N150 billion and N290 billion from N200 billion and N510 billion in the previous month. Similarly the amount of matured OMO bills repaid during the month

dropped by 74 percent to N67 billion from N260 billion.

Demand for PMA bills however rose sharply by 59 percent to N1.54 trillion from N914 billion in February. The amount offered and sold by the CBN also rose by 69 percent and 59 percent to NN612 billion from N384 billion. Also the amount of matured PMA bills repaid during the month rose by 16 percent to N445 billion from N384 billion in February.

Recalled that the Monetary Policy Committee (MPC) at its meeting held on March 22nd, 2016 had complained about the amount of excess liquidity in the banking system, saying it is driving demand for foreign exchange, and has the tendency to worsen the rising inflation rate.

The Committee said, “From the monetary data, the Committee noted that the excess liquidity in the banking system was contributing to the current pressure in the foreign exchange market with a strong pass-through to consumer prices.

Money market interest rates reflected the liquidity situation in the banking system.

Average inter-bank call and OBB rates, which stood at 0.5 and 2.77 per cent on 25 January 2016, closed at 4.00 and 5.00 per cent, respectively, on March 9, 2016. Between January 25th and end-February 2015, interbank call and OBB rates averaged 1.43 and 2.68 per cent, respectively. This was traced to liquidity surfeit in the banking system. The deposit money banks were, however, reluctant to grant new credit because of rising non-performing loans (NPLs), mainly in the oil sector, amongst other reasons.”

Forex: Bankers Committee calls for adjustments *CBN appoints 2 super agents for financial inclusion

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he Bankers Committee has said that the scarcity of foreign exchange in the country requires adjustment on the part of every Nigerian.

Addressing journalists at the end of the Committee’s meeting in Lagos on Thursday, Managing Director/ Chief Executive, GTBank Plc, Mr. Segun Agbaje said that the Committee is of the opinion that foreign exchange situation calls for adjustment on the part of everybody.

He spoke in company of Director, Banking Supervision Department, Central Bank of Nigeria (CBN), Mrs Tokunbo Martins, Managing Director/ Chief Executive, Fidelity Bank Plc, Mr. Nnamdi

Nwankwo, Managing Director/ Chief Executive, Unity Bank Plc, Mrs Tola Somefun and the Acting Director, Corporate Communication Department, CBN, Mr. Isaac Okoroafor.

Agbaje said, “The reality on the ground is that we are coming from $115 per barrel oil price to somewhere around N37 per barrel. We all have to make adjustment. Our habits have to change a bit because we have less money to spend. As corporates, you have to invest in import substitution and develop things locally. We all have to grind now, and make sure we allocate the scarce foreign exchange we have now, to make the best out of it.

“What we have in Nigeria today is a supply problem.

And the way you deal with a supply problem is first we have to cut back on demand, we have to develop import substitution so that at some point you are able to meet the type of demand that you have.

I am not sure there is any magic we can perform as a country other than get your supply to meet the type of demand that you have.”

Mr. Okoroafor however said that there has been noticeable improvement in allocation of foreign exchange to manufacturers.”

Meanwhile the CBN has appointed two firms as super agents to drive financial inclusion in the country.

Director, Banking Supervision Department, Central Bank of Nigeria (CBN), Mrs Tokunbo Martins disclosed this at the end of the Bankers Committee meeting, the name of the super agents are Interswitch Financial Inclusion Services and Innovatives Limited.

She said, “You will recall that sometimes past the CBN started agency banking. Now there are two new agents, called super agents that are supposed to recruit other agents that are supposed to distribute financial services at cheaper prices. Hopefully this would carry banking services to the nooks and crannies of Nigeria at affordable prices.”

Vanguard, MONDAY, APRIL 11, 2016 — 23

Corporate Finance

Fraudulent practices: CIS de-registers erring member, suspends another STORIES BY NKIRUKA NNOROM

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he Chartered Institute of Stockbrokers (CIS), has struck out the name of one of its members, Mr Adewale Adegboyega, from the members’ register for false representation, forgery and fraudulent practices.

In the same vein, Barrister Alex Ogbebor, CEO, Forthright Securities and Investment Limited, has been suspended from all stock market activities for a period of six month having been found guilty of three charges preferred against him.

Adegboyega was deregistered after serving three month jail term following his conviction by the Chief Magistrate Court of Lagos State,

sitting at Igbosere, Lagos Island, Lagos on May 7, 2013 .

Ogbebor, in his own part, was found guilty of writing to run down a competitor, Pan African Capital Plc, through deliberate misinformation.

CIS said in a statement that Ogbebor failed to observe high standards of commercial honour in its business with Pan African Capital and deliberately misled the institute through falsified facts to gain personal advantage over it.

It stated that the two stockbrokers were uncovered following investigation by CIS disciplinary tribunal which investigates and judges cases of unethical behaviours among the members.

Giving details, CIS

said that having been found guilty of three charges preferred against him under the Criminal Code Cap C 17 Vol. 2 Laws of Lagos State of Nigeria 2003, and on completion his jail term, Adegboyega’s case was referred to the CIS Investigating Panel.

“The Investigating Panel reported that the offences are incompatible with the status of a member of the Institute as they are capable of bringing discredit to the member, his employers and the institute, thereby becoming liable for unprofessional conduct.

In his judgement, Chairman, CIS’ Disciplinary Tribunal, Mr Oluwaseyi Abe, said the Tribunal upheld the view that Adegboyega’s conduct was of such a magnitude which warrants striking off his name from the register of members”.

PRESS BRIEFING - From left: The Managing Director, Guaranty Trust Bank Plc, Mr. Segun Agbaje; Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor; Director, Banking Supervision Department, CBN, Mrs. Tokunbo Martins; Managing Director, Unity Bank Plc, Mrs. Tomi Somefun and the Managing Director, Fidelity Bank Plc, Mr. Nnamdi Okonkwo during the press briefing on Bankers’ Committee decisions.

UBA shareholders task new MD on value addition ...endorse 60k dividend

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hareholders of United Bank for Africa (UBA) Plc have called on the incoming Group Managing Director/CEO, Mr. Kennedy Uzoka, to create unequalled value for all stakeholders during his tenure.

Uzoka will take over from the incumbent, Mr. Philip Oduzua, who retires on July 31, 2016 after successfully completing a two term tenure as the helmsman.

The shareholders also ratified the payment of N0.60 dividends for the year ended December 31, 2015.

Making the call at the th bank’s 54 Annual General Meeting (AGM) in Lagos, they said that the bank under Oduzua was investors’ friendly and urged Uzoka to strive and beat the record set by his predecessor.

Speaking on behalf of other shareholders, Sir Sunny Nwosu, National C o o r d i n a t o r , I n d e p e n d e n t S h a r e h o l d e r s Association of Nigeria (ISAN) appreciated Oduzua for his stewardship, saying that he won shareholders over to his side and commanded their respect throughout his tenure.

Commending the outgoing GMD, he said: “You are wonderful; we do not even expect the dividends being paid today. We wish you well anywhere you are going to,” while urging the incoming GMD to ensure that he adds value to what he met on

ground.

He expressed his appreciation to the bank’s board and management for growing profit and increasing dividend payment at a time when many other banks recorded lower profit and had to cut dividends, saying: “this dividend payment reinforces the resilience of the bank amidst challenging operating environment and also shows the quality of the bank’s management.”

In his address, the chairman of the bank, Mr. Tony Elumelu, charged the incoming GMD to put his best foot forward, saying: “To

whom much is given, much is expected. We suppose shareholders dividend will increase in your tenure.”

Speaking on the bank’s performance during the year, Elumelu said: “2015 was a challenging year, yet it was productive.

We grew post tax profits, we made considerable gains in efficiency, we have been prudent in risk management.

The collaborative effort of our supportive shareholders and hardworking and dedicated staff have continued to ensure that we profitable results.”

“We recorded N314 billion in gross earnings, representing 10 per cent year-onyear growth.

Stanbic IBTC Bank donates ICT lab to school

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o help bridge the gap for qualitative education for Nigerian students, Stanbic IBTC Bank, a member of Stanbic IBTC Holdings Plc., has donated a state-of-the-art information and communications technology (ICT) laboratory to Government Secondary School, Apo, Abuja.

The donation is in line with the group’s corporate social investment and forms part of initiatives to provide an ideal learning environment for the students that will help bolster their learning abilities, Stanbic IBTC said.

The ICT lab comes fully equipped with 14 units of high-grade desktop personal computers, two HP Deskjet 2135 printers, 120GB Smile Internet modem subscription, a digital projector with screen, four Channel CCTV system and two 2-horse power airconditioners. The laboratory also boasts of an ultramodern server and a 15 KVA generator and a 6KVA inverter system as back-up power source.

At the lab commissioning, Chief Executive, Stanbic IBTC Bank, Mr. Yinka Sanni, represented by the Head, Public Sector Group, Stanbic IBTC Bank, Mr. Yusufu Modibbo, said education remains the bedrock of society and that the Stanbic IBTC Group continues to seek opportunities, through its corporate social investment arm, for intervention to help build a vibrant educational sector in Nigeria.

24 — Vanguard, MONDAY, APRIL 11, 2016

Corporate Finance

Fidson Healthcare records N838m PAT

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idson Healthcare Plc has recorded 18 per cent growth in Profit After Tax , PAT for its audited 2015 financial results from N631million in 2014 to N744million in 2015.

This performance is in spite of a 16 per cent decline in turnover to N8.21billion, which was a result of the challenges to sales and distribution faced during the first half of 2015 largely due to the general elections. The upturn in sales witnessed in the second half of the year was curtailed by the paucity of foreign exchange for the importation of products and essential raw materials, which severely affected product availability.

The financial results also showed an increase of 6 per cent in operating profit from N1.45billion last year to N1.52billion.

According to management, the increase is largely as a result of the company’s cost optimization strategy and a reduction in selling and distribution expenses. The company’s cost improvement trend, which it embarked on a couple of years ago, is in line with its strategy to drive efficiency in the face of a challenging business environment.

There was a 29 per cent increase in finance cost, mainly due to the N2billion fixed-rate Bond issued in November 2014, from N554million to N715 million.

This impacted on Fidson’s profit before tax, which marginally dipped from N870 million last year to N838million – a decline of 4 per cent.

The company continues its focus on extensive brand building as part of its longterm strategy and will be introducing a number of new products into the Nigerian market. This is a direct result of the move to the company ’s new World Health Organisation Good Manufacturing Practice (WHO-GMP), where local production is being ramped up.

Acccording to a statement from the company “A new product line – Intravenous fluids – to be added to five existing product lines at the new factory will enable Fidson consolidate its manufacturing base in the near future.”

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FCMB supports agric sector for sustainable economic growth

By PETER EGWUATU

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irst City Monument Bank (FCMB) has continued to empower farmers with a view to reducing the level of poverty among them as part of its financial intermediation role for national economic growth.

This can be buttressed by the fact that the bank’s intervention has resulted in better access to financial resources by deserving individuals, organisations and companies. It has also led to improved processes, better output and profitability.

Much more, it has enhanced confidence in the ability of the financial services sector to drive economic growth.

First City Monument Bank’s intervention in the agribusiness sector is making far-reaching impact on the economy, as attested to by the Chairman of Tractor Owners and Hiring Facilities Association of Nigeria (TOHFAN), Alhaji Danladi Garba, when he commended FCMB for its support to the agric sector and farmers, at an engagement with the media in Lagos. FCMB had had provided funding worth N300 million to TOHFAN for the acquisition of tractors that were distributed to farmers in Kaduna state.

The Bank also collaborated with Doreo Partners to launch a support programme for farmers, known as BabbanGona (or ‘’great farm”).

This is an agricultural franchise

Mr. Ladi Balogun, MD/CEO, FCMB M M M M M model, where farmers are approval on the Bank’s trained and offered strategy and commitment to specially packaged loans to good corporate governance carry out their farming and risk management. He activities. said, “This partnership with The Bank recently IFC would help First City designed a series of training Monument Bank achieve our Mthis Mpopulation M M Rof smallM R strategic growth objectives”. for holder farmers for all- It is indeed comforting that inclusive agro-finance the bank’s helmsman, Mr. empowerment with a Balogun reiterated that its primary objective of agriculture intervention is eliminating poverty, real, and that it is building a encouraging agriculture as solid agric business that is at an alternative source of the centre of transforming the economic recovery for economy. He advised, ‘’if we Nigeria. truly want to continue emMr. Ladi Balogun, Group ploying the growing populaManaging Director/Chief tion, we need to not only Executive, First City feed Nigeria, but also set our Monument Bank Limited, sights on feeding the world.” had viewed IFC’s In the same vein, Mr. investment as a stamp of Kudzai Gumunyu, Divisional

Head, Agricultural Business Finance, First City Monument Bank (FCMB), while elaborating the bank’s interest in Agric financing, asserted that agriculture was the first occupation for man from creation and will remain the most vital until the end of days. He stated “at the fact that Agriculture has the potential to stimulate economic growth is no longer news. It is logical to expect that that agricultural financing will become an important instrument of economic policy for Nigeria, in her effort to stimulate development in all directions.

“Mr. Gumunyu revealed that FCMB intends to continue to partner with players in the agric space with a view to taking advantage of the many opportunities it presents and ultimately contribute positively towards economic growth, employment creation, import substitution and economic sustainability”.

With regards to the fears by farmers that the turn-around time and conditions attached to some credit facilities could be prohibitive, he allayed the fears, saying it is a positive experience with the FCMB facility. In his words: “Farmers have a point in complaining about slow approval processes as their businesses are seasonbound and need timely access to finance. Most complaints stem from some financial institutions not understanding the farmer’s businesses. Fortunately they will not experience this at FCMB as we have a team of experienced and qualified Agric Bankers who do not only have a holistic knowledge about agriculture, but its associated businesses, especially the fact that they are time and season-bound. We are committed to providing feedback to clients on the status of their requests within competitive timelines provided we are in possession of all the requisite information which can enable us make a decision.

NASD OTC positions for greater efficiency, unveils action plans

By NKIRUKA NNOROM

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ASDD OTC Plc, promoter of a trading network that eases secondary market trading of all securities of unquoted public companies in Nigeria, has outlined action plans in 2016 that will position it as a more efficient market in Africa.

As part of the plans, the Exchange said it has aligned its system with consensus reached at the 2015 African Securities Exchange Association (ASEA) conference which includes positioning to benefit from active investors across the globe that are looking for potential in African markets to invest.

Speaking at an interactive

forum with Chief Executive Officers of participating stockbroking houses in Lagos, the NASD Managing Director, Mr. Bola Ajomale, said the exchange will launch link notes, market making programmes and Private Equity fund in the second quarter of the year to take advantage of funds that are seeking investment destination.

The NASD boss said that the Exchange would tighten price structure within the year and is targeting two to three price bands for an effective price discovery.

“Regarding funds and investments wanting to come into Africa, we think that the way it is going to come in is in private equity and the funds

that want to come in are looking past the macro. They are looking for multiple returns, not percentage returns.

“So, as a result, ahead of the ASEA conference which happened few months ago, we have started work on private equity side; we have committees, they are active and working. We have engaged SEC in the process and we that in few months time we are going to be launching the private equity fund,” he said.

According to him, the exchange has identified about 100 companies that will be prospected for listing on its platform. He added that NASD OTC is in the process of joining the ASEA and hopes to complete the process and become a full member in the

second quarter.

On the performance of the exchange for the first quarter of the year, Ajomale said that 16.3 billion shares certificates have been dematrialised, while 144 million units valued at N959 million were traded.

He noted that the market slowed down after ‘a big jump in June 2015’, attributing the decline in activities to the Securities Exchange Commission (SEC)’s pronouncement that only companies quoted on the Nigerian Stock Exchange (NSE) are under its purview.

“We hope that this number will jump significantly in the next quarter, because we are hoping that SEC will correct the statement that only stocks on NSE are under its purview.”

Vanguard, MONDAY, APRIL 11, 2016 — 25

Homes & Housing Finance

How NMRC’s mortgage refinancing works US mortgage rates sink to 14-month low

By YINKA KOLAWOLE

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he Nigeria Mortgage Refinance Company (NMRC) was established to bridge the funding cost of residential mortgages and promote the availability as well as the affordability of good housing to Nigerians. It will achieve this by providing increased liquidity in the mortgage market through mortgage and commercial banks.

The company is driven by substantial private sector participation consisting of commercial banks, primary mortgage banks, insurance companies, private equity investors and international financial institutions through the Ministry of Finance. The aim is to help develop primary and secondary mortgage markets, raising long-term funds from both domestic capital market and foreign markets to provide accessible and affordable housing to Nigerians. Recall that NMRC last year announced the refinancing of 577 mortgages with the sale of N10 billion bonds. The 15-year bonds, listed on the Financial Market Dealers Association trading platform, is meant to refinance existing mortgages that meet specified underwriting requirements, according to Prof. Charles Inyangete,

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Typical housing estate that requires mortgage financing Managing Director/CEO of NMRC. But how exactly does the refinancing cycle work?

Refinancing cycle NMRC serves as a financial intermediary between the capital market and financial institutions that provide

mortgage loans to average working Nigerians. It will access the capital market by issuing long-term bonds, and utilise the proceeds of the bonds issued to provide liquidity to mortgage lending institutions by providing

NMRC acts as a simple intermediary between mortgage lenders and the capital markets

What to ask when buying a house You can learn a lot about a home before inspection, thanks to the Internet and your realtor’s digital tools. However, sometimes, it is best to ask the agent some questions when you’re touring a property before taking a decision to buy.

Why is the owner selling?

It’s crucial to know who owns the property, the relationship to the property and the motivations. Is it the original purchaser or the recipient of a bequest from a will? Though, the agent isn’t obligated to tell you, he or she might. The answer could reveal issues not included in the listing description.

Is there a new road planned nearby? Is the seller experiencing financial difficulty, are there litigation issues, any family disputes or criminal activity? If the agent does reveal, for instance, that the owner is desperate to close quickly, you might be able to use that to your advantage when negotiating price.

Type of title Some homeowners are finicky about disclosing their title deed on a property directly to buyers for a number of reasons.

However, a professional agent would have seen the document and can attest to its originality before showing the property. In that case, ask what type of title it is and whether or not you will be given the original copies at the point of sale.

Sellers’ timeline Does the property owner need to relocate

immediately for work/green card lottery/ business venture? Or are they waiting for the kids to finish the current school year? It’s important that your timeline for moving into the home and the owner ’s timeline for moving out match up.

What, exactly, is for sale?

Find out precisely what is included in the selling price. Are the furniture and fittings part of the deal? What about the adjoining land/ compound? Learn whether the appliances and fixtures, such as ceiling fans, are included in the sale price.

Are there issues with the property?

Though, sellers are supposed to reveal most problems; the norm is that any problems will usually be hidden but a chatty sales agent, neighbour or landlord might reveal more than is included in the listing. It certainly can’t hurt to ask. Does the house or street flood during the rainy season? Is there security and regular power supply?

The neighbours Asking about the people that live nearby and their profile is a significant piece of information in your property search. Is there an ex-Governor down the street, or perhaps a current state commissioner, diplomat, public servant, business mogul or first class royalty who lives next door?

The standing and status of these personalities in the society can significantly affect the attractiveness of a particular neighbourhood. *Culled from Lamudi Nigeria

refinancing facilities secured by the mortgage pool created according to an agreed underwriting standard.

Initial step is for a borrower to take out a mortgage loan from a participating mortgage lender based on the uniform underwriting criteria set by NMRC. In return the borrower will provide regular repayments of the loan principal plus interest. The borrower will also provide collateral in the form of a mortgage over the property to be purchased.

Second step is for the participating mortgage lenders to refinance the loans with NMRC. The participating mortgage lender in turn, provides security over its mortgage portfolio in favour of NMRC. It acts as a simple intermediary between mortgage lenders and the capital markets. By using its size and credit worthiness, NMRC is able to raise funds at a cheaper rate.

The third step is for NMRC to raise its own funding by accessing the capital markets and issuing bonds. NMRC refinances the mortgage loans of banks with recourse to the financial institutions. It will issue corporate bonds which do not involve any pass through of the credit risk attached to the mortgages.

NMRC acts as a simple intermediary between mortgage lenders and the capital markets. By using its size and credit worthiness, NMRC is able to raise funds at a cheaper rate. This is attributable to the stron\g shareholders, strong capital base, excellent quality of assets in its books and the fact that NMRC is regulated by CBN and SEC.

ortgage rates in the US fell to the lowest in more than a year, reducing borrowing costs during the peak season for home buying.

The average rate for a 30year fixed mortgage was 3.59 percent, down from from 3.71 percent last week and matching the level in early February 2015, Freddie Mac said in a statement Thursday.

The average 15-year rate slipped to 2.88 percent from 2.98 percent, the mortgagefinance company said.

Mortgage rates tracked a sharp drop in yields last week for the benchmark 10-year Treasuries, which have fallen on concerns of a slowing global economy. As the key U.S. spring buying season gets going, low borrowing costs will help fuel demand for the short of homes on the market, according Keith Gumbinger, vice president of mortgage-data company HSH.com.

“To the extent they incentivize more wannabe homebuyers into the marketplace, that only puts more upward pressure on prices,” he said in an interview Wednesday.

Purchases of existing homes decreased in all four major regions of the country in February, led by a 17 percent monthly plunge in the Northeast, as a lack of inventory limited transactions, according to the National Association of Realtors.

The average 30-year rate has been below 4 percent since the start of the year and is approaching the lowest level since 2013. It reached a record of 3.31 percent in November 2012.

Federal Reserve Chair Janet Yellen said last week that caution in raising U.S. interest rates is “especially warranted” as the global economy presents heightened risks.

Matthew Pointon, U.S. economist for Capital Economics Ltd., said he expects two Fed rate increases this year as the American economy shows strength, leading to a slight rise in borrowing costs. “The improving economy and inflationary pressure will force the Fed to act,” Pointon said in a phone interview Thursday. But rates “ will remain low for a long time. I don’t think mortgage affordability will be a huge issue.”

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26 — Vanguard, MONDAY, APRIL 11, 2016

Insurance

Premiums on policy to continue softening — BoE

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nsurers should check their capital levels as premiums on policies will probably continue to soften this year, a senior Bank of England official said.

Chris Moulder, the BoE’s Director of general insurance, said the “very tough market conditions” are likely to continue in much the same vein in 2016.

“We see premium rates in several lines continue to fall and, at the same time, extended terms and conditions are being accepted,” Moulder said in a speech.

Companies have been cushioned by the continued absence of significant natural catastrophe losses, and prior year reserve releases, Moulder said.

Many business plans at insurers still, however, contain some element of growth for 2016.

“I want to be quite clear that we don’t consider this, in itself, to be problematic. It is, however, important that firms that are looking to expand in current market conditions do so in a responsible and sustainable manner and are transparent with Boards about how they intend to attract business.”

“Insurers lack standardisation in cyber policy”

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yber insurance has evolved considerably since 1999 but commercial insurers lack standardisation in cyber policies and there is not a lot of data available for underwriters, said Alice Underwood, Executive Vice President of Willis Re Inc. “The data is not all that robust at this point in time. The available data depends on lot on what people are required to report. If they don’t have to report something, they are kind of inclined not to report it.” Insurers, by contrast, “can make a decent model of life insurance for individuals based on how old are you and do you smoke,” Underwood noted during a conference session at the International Cyber Risk Management Conference.

“The question as an actuary you want to know if you want to quantify something is, first of all, what the heck is it that you’re quantifying?”

Underwood said. “In terms of cyber coverage, what kinds of things are covered by this policy?

Liquidity squeeze and traction of pension funds

By PADDY EZEALA

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he challenges of infrastructure are a major impediment to the diversification of the economy.

The infrastructural deficiencies of the country are acknowledged and welldocumented and the negative impact on productivity glaring.

Our mineral resources would not have a competitive price tag if the cost of production remains prohibitive because of lack of basic infrastructure and necessary incentives. The same goes for agriculture which produce rots away owing to inadequate storage facilities.

We should see infrastructure beyond buildings, roads, electricity, running water, etc.

It should also include the necessary policy framework to drive growth.

The Contributory Pension Scheme (CPS) has the potential to provide the necessary financial cushion in our drive to build a solid economy beginning with addressing our infrastructural deficiencies. From a deficit of more than N2 trillion in the old defined benefit scheme before 2004, the CPS is closing in on N6 trillion in the amassment of pension funds even when a greater percentage of this is illiquid as pension funds don’t lie idle in bank accounts. This is even with far less than 10% market penetration in the pension industry. In other words, less than 10% of Nigerian workers in the formal and informal sectors of the economy have enrolled in the CPS. This explains the great potential and immense possibilities of the industry.

While savouring the excitement generated by the remarkable success of the CPS, it is important to note the marked difference between it and the old defined benefit scheme. This is because the word pension in Nigeria has acquired a pejorative connotation as a result of the runaway corruption that characterized the old scheme and still persists.

The various tiers of government have been eyeing the pension funds as a possible source of funding for infrastructure and other development projects.

Interestingly, this includes some states that have yet to comply with the Pension Reform Act 2014, by putting the necessary structures in place and enlisting in the CPS. The

Federal Government has yet to wield the big stick to bring every state and every worker into the scheme.

There is no gainsaying the fact that there must be an airtight policy framework for investment to ensure that risks are reduced to the barest minimum. Pension funds are held sacrosanct in view of the fiduciary relationship that exists between the Retirement Savings Account (RSA) holders and the Pension Fund Administrators (PFAs).

It should be reiterated that pension funds are wellpositioned to play a critical role in economic development in Nigeria. However, excitement must give way to reason to ensure proper application of the funds. It is gratifying that the investment portfolio in the pension industry has since 2010 been diversified to allow

investments in infrastructure funds and bonds as well as other asset classes such as supranational bonds and private equity funds. Before then, The National Pension Commission (PenCom) regulation on the investment of pension assets only allowed investment in ordinary shares, money market, corporate bonds and open -and close-end funds.

The CPS has the potential to provide the necessary financial cushion in our drive to build a solid economy beginning with addressing our infrastructural deficiencies

All these are core asset classes.

PenCom has done a marvelous job in regulating the industry so far.

The question now remains how funds in this subsector can be mobilized without the necessary prudential safeguards watered down or even compromised. The Minister of Power, Works and Housing, Mr. Babatunde Fashola recently at the Nigerian Pension Industry Strategy Implementation Roadmap Retreat organised by PenCom advocated the use of pension funds to address the infrastructural deficiencies of the country. In fact, the minister stated that Nigeria should take the lead in Africa in using people’s funds to drive inclusive growth. Said he, “I see a future for Africa led by Nigeria, using the resources of the people to build a future that include the people.”

LAUNCH - From left: Executive Director, Public Sector, Union Bank, Ibrahim Kwargana, Director Transformation Union Bank Plc- Mr. Joe Mbulu, Abia State Commissioner for Women Affairs-lady Mrs. Chinedu Brown , Head of Retail Union Bank, Mr, Carlos Wanderly at the Unionkorrect Product Launch and Branch Unveil of Union Bank, held at 10 Library Road, Umuahia, Abia State.

Dangote investing $200m in Cote d’Ivoire cement industry

By FRANKLIN ALLI

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angote Cement Plc is investing $200 million in Cote D’ivoire cement industry. Dangote Group Executive Director, Strategy, Projects and Portfolio Management, Mr. Devakumar Edwin , who disclosed this weekend in Lagos, said work has already started on the new 3 million metric ton per annum capacity cement grinding plant in Cote d Ivoire.

He stated that said the Cote Diviore project would cost the company $200 million and would be completed in 18 months.

“The project which has aroused a lot of interest from both the government and people of Cote d Ivoire, is sitting on over 60 hectares of land, next to the New Industrial Park in

Yongbon, a city just outside of Abidjan, the nation’s capital. “The grinding plants, made up of two lines of 1.5 million metric tonnes capacity each, when completed, will more than double the total capacity of local cement production in the francophone West African nation, as the plant would raise total local cement production capacity of the country by over 100 per cent.

“The plant when completed will utilize power off the grid and provide direct and indirect jobs for over 3,000 people from within Cote d Ivoire and other west African countries,” he said.

Mr. Edwin disclosed further that upon completion, Nigerian experts would be deployed to carryout initial training of local manpower and skill transfer.

Vanguard, MONDAY, APRIL 11, 2016 — 27

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“

e will deliver 10,000MW target, Fashola says.”PUNCH, April 2, 2016, p 8. That statement, already made stale by previous administrations, was uttered on April 1, 2016. Nigerians hope that in three years it would not turn out to be an April fool’s joke. For three weeks before the Minister of Power restated that pledge, power supply had averaged less than 2500MW and Nigerians had been treated to the same litany of familiar, and stale, excuses – vandalisation of pipelines, no gas supply, breakdown of systems etc. With all due respects to Fashola, one might ask where he had lived these past sixteen years. When the All Progressive Congress, APC, promised change, the least people expected were positive changes with respect to power, fuel, jobs and security. Excuses would not do; certainly not almost a year after taking over.

With the uncertainties associated with power and fuel not abating it is difficult to imagine any sort of rapid economic progress being made.

It is easily demonstrable that every economy runs on power and fuel supply. The twenty largest economies are also among the largest producers and consumers of power and fuel. Additionally, the power and fuel supply remain uninterrupted 24/7 in every leading country. This is not the case in Nigeria as recent events have demonstrated.

On March 31, 2016, eight of Nigeria’s power plants were shut. The nation recorded zero power generation for hours – driving consumers to either stop work or resort to the use of generators. That would have been disastrous enough in another country. But, the total power outage occurred at the same time that Nigerians were still serving the “economic death sentence” pronounced by the Minister of State for Petroleum who had announced that fuel scarcity will linger until May. But, even the two months deadline was not categorically

Economic summit: elephant goes into labour delivers a mouse – 2 stated. Dr Kachikwu had told us quite clearly that, “I don’t want to put a time frame”. So, even regular fuel supply is not guaranteed by May. Under those circumstances what could the Summit, which had more low points, be discussing? The nation will have neither power nor fuel to carry out its programmes anyway. However, since the Federal government had organized an economic retreat and the results of their deliberations had been released, there is a need to examine some of them.

Whoever said that “the more things change, the more they remain the same” must have had the retreat in mind. From what was released, it was clear that nobody in attendance at that retreat had even a modest recollection of Nigeria’s economic history. The Summit would have benefited from the advice of somebody who remembers yesterday.

The National Agricultural Land Development Agency, NALDA, was an initiative of the Babangida administration which failed woefully. The

reasons NALDA failed in the 1990s are too numerous to recount here. But, one of my first commentaries in the VANGUARD, during IBB’s regime was in relation to NALDA. Then, as now, the praise-singers and spokesmen of the government had hailed it as a great initiative which would solve the problem of food security once for all. I thought differently. In fact, the point was made then, and is being repeated now, that NALDA was,

Even before the break-up of some of the LGs, it was virtually impossible to obtain 10,000, 20,000 or 50,000 hectares anywhere to be used for NALDA’s projects

and is, based on faulty foundations and that it would only result in massive fertilizer fraud. By the time IBB’s NALDA was laid to rest, virtually no state of Nigeria had established the machinery to make it work.

NALDA failed then for one cardinal reason.

The programme clashed with the entrenched Land Use Decree of 1978 – which Obasanjo as military Head of State used to forcefully acquire peoples’ land at Sango Ota for Obasanjo Farms – which was called Temperance Farms at the time.

The states still own the land, and for NALDA to take off, each state would have to grant the required parcels of land in each Local Government to the Federal Government. Anybody in Abuja who thinks that state governments are prepared to give up 50,000 hectares of land in each LG must be living in a fool’s paradise. The LGs when IBB established NALDA were about 583 in number; now they are 774. Even before the breakup of some of the LGs, it was virtually impossible to obtain 10,000, 20,000 or 50,000 hectares anywhere to be used

for NALDA’s projects.

Furthermore, some states are more urbanized than others. In the 1990s, a question was asked, and the question is repeated now. Where in Lagos Island, Lagos Mainland, Ikeja, Mushin, or Apapa can anybody find 100 hectares of land for NALDA? The same question can be asked of Ibadan, Abeokuta, Akure, Ado-Ekiti, Benin, Onitsha, Enugu, Portharcourt, Aba, Calabar, Uyo, Kaduna, Jos, Kano etc.

Any funds to be allocated to the scheme will ab initio amount to cheating for the most urbanized states which can never provide the land mass needed to prosecute their own programmes. Bluntly put, NALDA is a basically rural Northern programme from which no Southern state can benefit. Where is 50,000 hectares in Abak for God’s sake?

Another programme borrowed from the IBB era is the wheat project. Those of us who were close to the fraudulent wheat project on which IBB’s government threw away hundreds of millions of naira can only hope that there was a typo-graphical error there somewhere. Only God knows who persuaded Babangida that wheat, which is a temperate zone crop, could be cultivated, with comparative advantage, in the tropical sun.

Microfinance

NNEW women MfB a big achievement in 2015 — Women Entrepreneurs ...As Okanlawon bows out as President STORIES BY PROVIDENCE OBUH

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ECA’s Network of Entrepreneurial Women (NNEW) has described the NNEW Women’s Microfinance Bank Limited as a big achievement in 2015 even as it urged government to ensure conducive environment for women owned businesses to flourish.

Meanwhile, President, NNEW, Mrs. Lola Okanlawon, bows out after a five year tenure expired April 2016.

Speaking at the NNEW Annual General Meeting in Lagos, Okanlawon, said that the year 2015 was challenging with persistent difficulties in the business environment.

In addition, she said that women entrepreneurs also bore the brunt, “nearly every Nigerian, having to grapple with lowering income, high cost of doing business, multiple taxes and levies, competing financial C M Y K

demands, poor SME-support system, among others.

She pointed out that SMEs with female ownership in Nigeria represent about 30 to 37 percent which is about eight to 10 million. To this end, she said, “The governments, at all levels, need to ensure a conducive environment for business to flourish and the economy to grow.

“But in spite of the seeming gloom, NNEW achieved great strides as a business network.

Significantly, in March 2015, the Central Bank of Nigeria (CBN) formally handed over the certificate granting NNEW Women’s Microfinance Bank Ltd a unit license. This Bank is the first of its kind in Nigeria as well as in the whole of West Africa.

“In 2015 also, NNEW participated actively in the United Nations Industrial Development Organization (UNIDO) National Quality Infrastructure Project (NQIP) for Nigeria to support the economic competitiveness of the trade and investment

sectors in Nigeria,” she said.

Also, DG, Nigeria Employers Consultative Association (NECA), Mr. Segun Osinowo, commended the network, pledging continuous support.

Osinowo who was

represented by the Director, Social ,Economic and Labour Affairs, Mr. Timothy Olawale, advised members of the network to contribute to funding of programmes to enhance financial sustainability.

He said, “The period of five years was a period when businesses were going

through challenges but through synergy and collective activities, your businesses are waxing stronger. This is why forming group is very important.

People who because of subscription fee refuse to join the network have a lot to lose.”

Umuchinemere Procredit MfB projects N1.5bn loan disbursement in 2016 beneficiaries in 2015.

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muchinemere Procredit Micro Finance Bank (UPMFB) has projected a total disbursement of N1.5 billion in 2016.

Meanwhile, the bank disbursed a total of N1, 141, 937, 000 in 2015, out of which N712.4 million micro credit funds were given to 3,814 active poor people while the rest was given as other loans.

This is contained in an unaudited management report made available by Head of Credit, UPMFB, Mr. Ikechukwu Ngene.

Ngene advised the bank’s loan beneficiaries to ensure

prudent use of the facilities on viable ventures and avoid multiple borrowing, saying, “Credibility is paramount to borrowing. I am happy that despite the hash economic condition, the bank’s credit beneficiaries are doing well.”

On the Federal Government’s Micro, Small and Medium Enterprises (MSME) Special Development Fund, being disbursed, in partnership with Enugu State Government, Head of Public/Media Relations Unit, Mr. Abuchi Anueyiagu, disclosed that the bank disbursed a total of N180, 740, 000 to 548

Anueyiagu said, “The gender distribution of the facilities indicates that there were more male beneficiaries of the bank’s micro credit funds than females in 2015.

Of the total beneficiaries, 2,085 were males while the remaining 1,729 others were females. “In the previous year, there were also more male beneficiaries of such facilities than the females, as the male beneficiaries in 2014, for instance, were a total of 2,300, while the females were 1,986. In 2014, the bank gave out a total micro loans of N659,700,000 but stepped it up by N52.7million in 2015,” he said.

28 — Vanguard, MONDAY, APRIL 11, 2016

e-Commerce Konga, Lagos partner to empower MSMEs

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UNVEILING - From left: Director of Commerce, Ministry of Commerce, Industry & Cooperatives, Mr. Hakeem Adeniji; Konga’s Director of Marketing & Customer Experience, Mayowa Adebayo; Commissioner for Commerce, Industry & Cooperatives, Prince Rotimi Ogunleye; Permanent Secretary, Ministry of Commerce, Industry & Cooperatives, Mr. Akodu Olalekan and Industry Manager, Google, Mrs. Jola Aderemi-Makinde at the unveiling of MSME Exclusive Fair in Lagos.

n a bid to empower the medium, small and micro enterprise, MSME operators in Nigeria, Nigeria’s online mall, Konga.com, has entered into strategic partnership with the Lagos State Ministry of Commerce, Industry and Cooperatives to host and sponsor the first MSME Exclusive Fair that will nd take to th place from May 2 8 2016 in Lagos.

Speaking at the unveiling of the logo for the maiden MSME Exclusive Fair before a stakeholders’ forum in the State, the commissioner for Commerce, Industry &

Demand for online car loans, insurance hits 65% growth STORIES BY JONAH NWOKPOKU

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emand for loan facilities and insurance products through the internet have increased significantly by over 65 per cent, according to a survey by online vehicle marketplace, Carmudi.com.

Carmudi said its several partnerships with lenders and insurance providers to make services available online

especially for online car shoppers have seen over 65 per cent subscription for car loans and 35 per cent subscription for auto insurance.

According to the online car dealer, “Many loan and insurance providers are now making use of Nigeria’s growing internet penetration and smartphone usage to advertise their services and connect with customers directly. In 2014, only 2.5

million vehicles had valid insurance meaning that more than 85 per cent of the 15 million cars plying the Nigerian roads were insured.

The number was much lower in 2012 and 2013.

“The last quarter of 2015 saw an improvement in the number of car insurance policies bought by car owners. According to the Nigerian Insurers Association (NIA) an estimated 3 million

Nigerians had valid car insurance at the end of 2015 and by the end of the first second quarter of 2016 the number of car insurance holders is estimated to rise by 39 per cent.”

Analysts believe that that the rise in the number of insurance policies could be attributed to the increase in internet penetration and the use of mobile and other digital marketing and information services.

Cooperatives, Prince Rotimi Ogunleye said: “The State is committed to strengthening enterprise by bringing together and to the fore indigenous brands proudly founded, created and owned

by Nigerians and in Nigeria.

This is why the Ministry of Commerce, Industry & Cooperatives is organizing the first MSME Exclusive Fair to enhance industrial and commercial activities in the State as well as promote economic growth and development.”

In her remarks, the Director of Marketing & Customer Experience, Konga.com, Mayowa Adebayo said: “It is the intention of Konga to empower indigenous entrepreneurs to sell on the Konga Mall. Being the engine of trade and commerce in Africa, we are determined to provide market access to at least 50 per cent of the SMEs currently available in Nigeria.

We will teach them how to sell, how to promote their products, link them with mentors for guidance, support them using new media to extend their reach as we currently deliver to 36 states in Nigeria. Konga would be equipping them with the right tools to sell more and showcase their indigenous products to the entire world.

Aviation

Aviation industry contributed $685m to Nigeria’s GDP in 2015 — Demuren

By LAWANI MIKAIRU

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he Nigerian aviation industry contributed $685 million to the country’s Gross Domestic Product, GDP, in 2015, just as $50 billion would be needed over the next 28 years to grow the sector .

These revelations were made by the Managing Director, EAN Aviation, Mr. Olusegun Demuren, at the Nigerian Business Aviation Conference 2016, held in Lagos.

The conference with the Theme “ Sustaining Nigeria’s Position on the Africa Business Aviation Landscape “ emphasised the need for Africa governments to enact enabling legislations to make aviation contribute more to the economic growth of the continent as it has been witnessed in other continents.

Demurin said business aviation, which comprised chartered and private jet operators contributed 25 per cent out of the total $685 million the sector contributed last year . He however added that there is need for more operators to come in to the burgeoning

business aviation sector.

On the viability of the business aviation sector, he revealed that there is growing interest in the use of private jets and helicopters for Intelligence Surveillance and Reconnaissance, ISC, stressing that the Nigerian Customs Service, NCS, recently acquired a Cessna CJ4 jet for border patrol. Some states have acquired up to four Intelligence Surveillance and Reconnaissance (ISC) helicopters.

He also said Nigeria Police Force has a fleet of surveillance helicopters in Abuja and Niger Delta. This, he said, would drive demand for more fixed based operations, maintenance facilities and create jobs.

Demuren gave a statistical data of the growth of the business or private jet operation of the Nigeria civil aviation. He said that in 1980s, only 15 business jets were in operation in the country, and in 2006, the number grew to 30 and 150 by 2015. According to him, the growth was further propelled by 305 per cent in dollar

millionaires seen between year 2000-2005. He said “Five per cent projected fleet Compound Annual Growth Rate (CAGR).Fifty per cent

business aviation fleet is in Nigeria and South Africa.”

On some of the factors mitigating against the fast growth of aviation in Nigeria,

Demuren said double taxation and imposition of duties like the five per cent import duty tax on aircraft is against international conventions. Nigeria is a signatory to the Cape Town Convention, which does not require payment for tax on moveable assets.

NCAT rector calls for improvement in manpower training sector and its supply chain and in other countries as well as

By LAWANI MIKAIRU & DANIEL ETEGHE

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he Rector, Nigeria College of Aviation Technology, Zaria, NCAT, Captain Samuel Caulcrick has called for massive investment in human capital development so as to ensure a sustainable air transportation growth. He said the industry must pursue “smart, coordinated, and cooperative manpower development strategy “ for the nation’s air transport industry.

Delivering a paper entitled:”The essence of a welltrained manpower to the aviation industry ”, at an aviation summit held in Abuja, Capt Caulcrick observed that the availability of qualified and competent personnel is the propelling force for the sustainable growth of aviation

Nigeria, adding that it is also the path towards excellence in safety and security.

The NCAT boss said, “It is the quality and proficiency of the aviation personnel that can credibly give birth to a safe air transport industry, build air travellers’ confidence, make valuable contribution to the nation’s Gross Domestic Product (GDP)”.

According to him the aviation sector in Nigeria contributes 0.4percent to Nigerian GDP. He listed the benefits to include, ¦ 59 billion directly contributed through the output of the aviation sector (airlines, airports and ground services); ¦ 34 billion indirectly contributed through the aviation sector’s supply chain; and ¦ 27 billion contributed through the spending by the employees of the aviation

in addition to ¦ 78 billion in catalytic benefits through tourism, which raises the overall contribution to ¦ 198 billion or 0.4% of GDP. In his opening address, organizer of the Airport Business Summit and Expo, Mr. Fortune Idu said for the industry to continue to improve in the delivery of quality passengers experience in safe and secured manner, policy makers, aviation professionals, air transport investors and the users of air transport services will need to meet periodically to share information and deliberate on the future of the industry and to help direct national policies, planning, programmes and projects towards improving airport facilities, air transportation infrastructures and general operations.

Vanguard, MONDAY, APRIL 11, 2016 — 29

Economy

Stakeholders challenge monopoly in oil & gas sector … Policy review may be underway … Nigerdock offers 30% cost reduction STORIES BY EMEKA ANAETO, ECONOMY EDITOR

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midst growing concerns over alleged monopoly status enjoyed by one of the operators in the Nigerian Oil and Gas Logistics and supply services, key stakeholders have called for regulatory appraisal of the competition environment.

There are also indications that a policy dialogue would be established by the federal ministry of transportation for stakeholders in the maritime industry to address the lingering issues of monopoly and trade malpractices.

The indication came with recent acrimony generated by alleged forceful diversion of businesses to a particular operator under unsubstantiated government directive.

Last week, an official of the ministry told Vanguard that the authorities in the ministry as well as the Nigerian Customs Service, NCS, may call a stakeholders’ meeting to resolve the festering crisis.

He also indicated that the Federal Government of Nigeria would be reviewing the relevant laws and other directives guiding private sector operators in the maritime logistics services with a view to ensuring even playing field.

Also reacting to a similar complaint by the chairman of Jagal Group, owners of Nigerdock and Snake Island Intergrated Free Zone, SIIFZ, Mr. Anwar Jarmallami, The Comptroller-General of NCS, Col. Hameed Alli (Retd) said last week that federal government would look into the industry competition issues with a view to redressing any anomaly,

C M Y K

adding that the complaints earlier made by the management of the company would be scrutinized by top management of NCS who are knowledgable enough to know the right thing to do.

In his words “our people are knowledgable of what the law says and what happens here.

We will go back and look at your claims and address anything that undermines the success of the industry.

“The idea of change is getting business on the line of law, equity and justice and we shall ensure that happens

here”.

According to industry sources the operators are restive over the dominant monopoly in the Nigerian Oil and Gas Logistics and Supply Services which has existed for 20 years, sabotaging the national economy, conspiring and working against any potential competitors.

Giving the details of the complaints Jarmallami had told the NCS boss who was on official visit to the company last that the monopoly has consistently and aggressively used different government institutions to compromise,

maintain and entrench its monopoly position with impunity.

He stated that attempts have been made in times past to also use the Customs. According to him the net effects of the monopoly’s actions include driving away investments from Nigeria, while making the oil and gas sector in Nigeria the most expensive in the world, adding extra cost of between USD3 and USD5 per barrel of oil produced in Nigeria which translates to over USD1.5 billion per annum.

Meanwhile Jarmallami has stated that SIIFZ and Nigerdock are open for competitive business and we are determined to bring down •Ibe Kachikwu, Minster of operational costs of their State for Petroleum Resources clients by at least 30 per cent.

Economists forecast March inflation at above 12% A

fter a massive leap in inflation for the month of February 2016 economy analysts are seeing further rise to range between 11.76 to 12.1 per cent amidst costpush rises in consumer prices across the country in the last one month.

Inflation rate had risen in February to 11.38 from 9.6 per cent in January, a 1.77 percentage point surge, the steepest in recent times with the National Bureau of Statistics and independent analysts attributing the rise to cost pressures arising from pass-through effects of foreign exchange crises in the economy, which in turn pushed import components of the inflationary measures very high.

This time analysts are seeing the effect of the prolonged energy crises in the country as major contributor to the cost pressures in March, leading to a third consecutive monthly increase in inflation rate this year.

As a result economists at Financial Derivatives Company Limited, FDC, run by one of Nigeria’s notable

economists, Bismark Rewane, stated “we are projecting a significant increase of 0.7 per cent in the March inflation number to 12.1 per cent”.

They explained “the month of March was unique as the fuel scarcity intensified and higher transport costs filtered through to commodity prices such as beans, tomato and pepper.

“While our initial time series analysis projected an increase of 0.4 per cent, the severity and longevity of the prevailing fuel scarcity has distorted price levels.

“Our retail study showed that prices of many consumer goods have remained stubbornly high and in some cases increased in spite of consumer resistance.

“The factors that are contributing to the spike in inflation include seasonality, cost push factors, money supply and foreign exchange shortage.

“These factors while transient in nature are becoming more permanent. As these factors grow increasingly embedded, they are making consumers panic.

“Anticipated inflation is more important because of the

pass through effect of increased demand and expectations of higher prices on current prices”.

FDC economists also stated that the dichotomy between urban and rural prices may persist given the impact of rising transport costs and exchange rate pressures on urban prices.

A little more conservative in its own analysis and forecast, economists at FSDH Merchant Bank Limited stated “we expect the March 2016 inflation rate to increase to 11.76 per cent from 11.38 per cent recorded in the month of February 2016.

“We expect the increase in the inflation rate to come from increase in transportation cost and food and beverages as a result of the shortage in fuel supply.

They however, added that other factors that would drive inflation rate are include the implementation of the new electricity tariff and the impact of the weak foreign exchange rate on imported goods.

The Food Price Index, FPI, that the Food and Agriculture Organization, FAO, released last week shows that the FPI was up 1.0 per cent in March.

The increase recorded in the FPI was because of a strong recovery in sugar prices and increase in vegetable oil prices.

The increases in both sugar and vegetable oil were more than enough to offset the plunge in dairy prices.

FSDH economists stated “our analysis indicates that the value of the Naira remained stable at the inter-bank market while it appreciated at the parallel market.

“The appreciation recorded at the parallel market between the two months under review moderated the impact of the imported consumer good prices in the domestic market”.

They further informed that “the prices of most of the food items that FSDH Research monitored in March 2016 increased.

“The prices of tomatoes, rice, vegetable oil, beans, yam and meat increased by 15.56%, 11.11%, 7.59%, 6.67%, 4.76%, and 1.11% respectively.

However, the prices of onions, Irish potatoes, fish and garri fell by 16.19%, 5.56%, 4.71% and 3.61% respectively”.

According to their research prices of sweet potatoes and palm oil remained unchanged.

30 — Vanguard, MONDAY, APRIL 11, 2016

People in Business manufacturing firm in Nigeria. We are very good at selling plastics but I am looking for women in the field and I hope that via this medium, we will be able to come together and form a female plastics manufacturers association.

If only industries could be provided with power, a lot of people will enjoy — Mrs Adebisi Kuforiji

By EBELE ORAKPO

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rs Adebisi Kuforiji is the Managing Director/Chief Executive Officer of Hindle Plastics Limited, plastics manufacturing outfit b ased in Lagos. In this chat with Vanguard, the Abeokuta, Ogun State-born computer scientist-turnedmanufacturer, speaks on how she ventured into manufacturing, the challenges, and says getting raw materials is very difficult despite the fact that Nigeria produces oil, their major source of raw materials. Excerpts: Background: Armed with a degree in Computer Science from the University of Ife (now Obafemi Awolowo University) in 1986, Mrs. Kuforiji worked with Société Générale Bank for nine years before leaving Nigeria because she was not really fulfilled. "I thrived on the training aspect; programming/ system design was not really my thing. But the job prepared me for the days ahead. When I left the bank,I relocated to the US and then England. After having my twins 13 years ago, I came back to Nigeria because I was tired of that system.

Relocating to Nigeria: Kuforiji who insists her first job is being the mother of four children and manufacturer of plastics is her second job, said: “Before I came back, my younger sister’s husband said he wanted to set up a plastics factory from scratch. I had no idea what that entails but I said if he told me what he wanted, I could do it because I have always believed in Richard Branson’s saying that if someone asks you if you can do something, just say yes and then go and learn. That was exactly what I did. He had massive land and a lot of money to work with. So I took up the challenge. I saw it as a job that would be fulfilling both financially and morally.

I relocated and started to build. I called all the mentors I had in various industries, I went on the internet, and got all the help I could get. One of them is Shoga Sonaike who is in charge of a massive plastics manufacturing firm in Lagos.

He put me under his wings and taught me a lot.

Cartel: Sonaike told me the secret of the business. He said it is a man’s world aside from being an Indians’ world. They hoard the materials, block access to those that you can buy moulds from; those that will give you the parts etc. But I agreed to take up the challenge.

Machines/Moulds/Raw materials: I had to go to India C M Y K

•Mrs Adebisi Kuforiji

•The products •Dame Abimbola Fashola (r) endorsing Hindle's sitz bath.

and Dubai to get the best of raw materials and machines.

We have different types of machines – injection machines, blow-moulding machines for bottles, kegs etc. I bought the machines and two moulds at that time. The difficult part was getting raw materials. We are supposed to be sourcing our raw materials from Eleme Petrochemical Company but they never have enough so we import. Imagine us in Nigeria where raw materials for plastics are a by-product of our oil , yet, we don’t have! And because we have to get from India, the Indians monopolized the market and whatever they say is the cost is what we pay. We tried to bring in and we had our fingers burnt. It is a massive cartel; very scary so we buy from them unless you don’t want to produce.

A lot of companies use recycled materials which is cheaper but because we make medical products, we cannot afford to use recycled raw materials. We use virgin because we want them to be as clean as possible. We can use recycled for large jerry cans that people use for fuel.

In less than six months, (November-March), because of

the dollar fluctuations, prices have doubled. cannot pass the cost to customers for now, so absorb it.

the We our we

Going solo: I had a contract with my brother in law because you don’t want businesses to go on for too long so it doesn’t destroy relationship. So we agreed that at the end of two years, I would have employed the staff, run the products and ensure a proper handover. I said: “Look, I love this business. It’s something I would really like to go into.

Could we reach an agreement

We are supposed to source raw materials from Eleme Petrochemical Company but they never have enough...Imagine Nigeria where raw materials for plastics are a byproduct of our oil , and we have to import

whereby I can do things that you do not do at all?”

Incidentally, the plastic firm is just a small part of his business group.

He agreed. Nigeria is unbelievable in terms of market strength. That was how we started Hindle Plastics. Hindle House is where I used to live in England; that was where I had my twins so that name gives me good memories.

My first director in the bank believed in me and in the project and encouraged me. I try to have what we call Personal Network Development; people are always useful all of your life. I brought some other people on board. Nobody produces sitz baths in Nigeria except us.

When I had my twins in England, they gave me sitz bath for healing rather than the traditional hot water and cloth.

Virtually all teaching hospitals in Lagos use it and we can't even meet demand; we don‘t have money.

What happens is that if a customer orders 10,000 pieces, we source for money to do 7,000, deliver, collect the money and use part of it to produce the remaining 3,000.

Women: I do not know any other woman that owns a plastics

Challenges: Funding is one. A lot of people want to invest but as a business owner, you have to think of either going for debt financing or equity financing.

For now, I do equity financing. We do not owe any bank. We have a couple of directors that have invested in the business but I am careful so that we don’t go past the 50% for me and have a case of sharing until you lose control. I have very good and supportive directors. Any time there is a problem, they invest.

Each mould, mostly made of German steel, and weighs minimum of two tons, costs N2.5m.

We tried to make one here but it started to rust after three months. The ones we get from China have five-year warranty and it can produce between 500,000 and one million products.

So we just need money from Bank of Industry and Microfinance companies or a company to give us money and say 'ok, use this to run this particular project.

Return in three or six months.' We don’t have such offers.

Selling: Our sitz bath is our number one product, the others are slow and we have shifted our focus to the sitz bath and we produce the others only on order.

Power: If only government can provide power for industries, a lot of families will be fine.

We are all suffering. Imagine the bakery in my area shut down for two weeks for lack of fuel to power the generator!

Let us prioritize ministries, do it step by step, focus on one thing first and get it right. If small businesses can be given power at least 12 hours a day, they will manage it. Without a generator, no factory can function in Nigeria. We have a transformer! Why should a company buy a transformer?

But we had to.

Next five years: Our sitz bath weighs 330 grams at N1,500 maximum while those in US weigh 170g and go for $10 each. It means you are getting what is almost twice the size, locally made and of high quality. We should look inwards. My vision is to have a one-stop shop for medical plastics. Anyone who wants kidney dishes, sitz baths, test tubes, etc., can go to Hindle Plastics.

Vanguard, MONDAY, APRIL 11, 2016 — 31

Advertising & Media Sustainability as instrument of change for FBN Holding Stories by PRINCEWILL EKWUJURU

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s a successful global business concern, businesses understand that their actions and vision play a foundational role in ensuring the success of future generations.

They understand that their progress require that they invest in the regions and locations where they operate, building healthy, resilient communities.

While businesses exist to make profit, and this isn’t meant to change as a goal. The reality is that no organisation operates in isolation. CSR is about managing these relationships to produce an overall positive impact on society.

Since businesses thrive within communities they operate.

Therefore they should take some responsibility for the wellbeing of its operating communities and also endeavor to manage the direct and indirect impact of its business activities. And this doesn’t always have to be in terms of money, but in terms of opportunities for advancement and growth.

Based on this premise, FBN Holding has undertaken several social responsibility drives and more. It’s been no doubt in the mind of the management of the company that the communities where its people live and work have been instrumental to its success. That must be why a major aspect of the Group’s citizenship is the “Supporting our Communities” platform, which has helped it build its various communal impacts through commitment to the fundamental areas of education, health, welfare and economic empowerment. Today, as one of Africa’s leading brands, it appreciates the need for supporting ideas and enabling the dreams of individuals within the communities where it operates.

In terms of “Environmental Sustainability,” the Group has endeavored to focus on initiatives that serve to minimize carbon footprints,

INAUGURATION - From Left: Chairman, Lagos State Chapter of Nigerian Institute of Public Relations (NIPR), Olusegun McMedal; Chief of Staff to the President of the Institute, Willy Ogbidi; and Chairperson, Caretaker Committee, Ethel Agbeyegbe handing over to the new Chairman at the inauguration of new executives of the Chapter in Lagos. while promoting wildlife and biodiversity conservation and preservation towards carbon neutrality in partnership with relevant bodies.

Presently, it is working on the more comprehensive Environmental, Social & Governance Management System (ESGMS) as part of its structured approach to embedding sustainability and minimizing adverse environmental and social impacts.

Riding on its rich tradition of giving back to society and

nurturing intellectual development, which dates as far back as 1978, when the Group started the National Essay Competition where winners gain automatic employment among other prizes, FBN Holdings has continued to impact lives, operating through specific strategic programmes.

In partnership with the Lagos Empowerment and Resource Network (LEARN) and Junior Achievement Nigeria (JAN), FBN Holdings has been driving career counselling &

SMEs role and Lekki Garden brand value

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ince the Lekki Garden collapse incident occurred, sentiments have been wiped, there’s been blames and counter blames, yet no one invests to lose it overnight, and expects to remain in business.

Whichever way, the Lekki Garden brand has had its own image bashing via the incident that occurred in March 2016.

However, its contribution as a Small and Medium

Enterprises, SMEs cannot be over-looked with the major role they play in economic development of countries, particularly in developing countries. For example, formal SMEs contribute up to 45 percent of total employment and up to 33 percent of national income, that Gross Domestic Product, GDP in emerging economies. These numbers are significantly higher when informal SMEs are included.

Airtel unveils Smart Speedoo …Offers free surfing

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Financial Literacy for young ones through the Future First programme, designed to empower students of secondary schools between the ages of 13 and 17years.

Through their collaboration with JAN, the Group has been providing students with the tools and knowledge required for long term financial independence, availing senior secondary school students of practical business experience through the organization and operation of an after-school business enterprise.

Another Community Support initiative of the Group is the FirstBank Infrastructural Development programme, which has been promoting infrastructure development in schools and hospitals, in recognition of its importance in improving the quality of life.

In recent years, the programme has seen it support projects like the Faculty of Arts Building at the University of Port-Harcourt, the Entrepreneur Centre at the University of Abuja, the Sports Pavilion for Queens College, the Squash Court for Kings College, an Administrative Block for Jesuit Memorial College, a Red Cross Clinic in Ibadan, the Langbasa Potable Water Projects in Eti Osa Local Government Area of Lagos State, a 500-seater lecture theatre for the Federal University of Technology Akure and a Solar Lightening Project in Kirikiri Town, Apapa, Lagos.

irtel Nigeria, has unveiled SmartSpeedoo, a revolutionary service that allow customers experience real data while browsing at affordable tariff and enjoyingfree megabytes.

Airtel Smart Speedoo, which can be activated using *141#, was unveiled in Lagos, the Chief Commercial Officer, Airtel, Ahmad Mokhles, said the company is passionate about creating innovative mobile Internet platforms, value offerings and opportunities that will help telecoms consumers in Nigeria stay connected and be fully empowered to fulfil their dreams.

“Airtel Nigeria is intensely interested in democratizing data tariff and we have taken a huge step forward in this journey in line

with our major objective of becoming the provider of first choice for mobile Internet services,” Mokhles added. Speaking on how Airtel Speedo works, Vice President, Data & Digital Services, Airtel, Nitin Anand, said customers using Smart Speedoo enjoy low rate in addition to free data the more they browse.

“When a customer uses up to 10mb at 1kobo/ kb, Airtel gives him 10mb free. And when his usage gets to 50mb, the browsing rate drops to 0.5kobo/kb, then he gets 50mb free. When the customer’s usage reaches 100mb, the rate drops further to 0.2kobo/kb and he is given 100mb free,” Anand explained.

Anand further noted that this cycle continues every month, thereby giving Airtel customers the FREE SURF experience.

According to estimates,600 million jobs will be needed in the next 15 years to absorb the growing global workforce, mainly in Asia and SubSaharan Africa. In emerging markets, like Nigeria, most formal jobs are with SMEs, which also create 4 out of 5 new positions. Even though finance is a key constraint to their growth; without it, many SMEs languish and stagnate.

A World Bank Group study suggests there are between 365445 million micro, small and medium enterprises, MSMEs in emerging markets: 25-30 million are formal SMEs; 55-70 million are formal micro enterprises; and 285-345 million are informal enterprises.

Meanwhile, with Nigeria standing at 17 million housing units deficit currently, and chances are that the government will not be able to fulfill its campaign pledge to provide 1 million units for Nigerians yearly, the country cannot afford to run down any of the big players in the industry particularly if the company has no history of collapse or poor quality delivery until now. This was the view of a structural Engineer, Samuel Ekulumba and Sons.

Giant vitamin water hits Nigeria

G

iant Vitamin Water, a breakthrough product with a range of variants is now available in the country. The brand, which is the first of its kind in the Nigerian beverage market has formally been unveiled in Lagos.

The product, from the stable of Giant Beverages Limited, is made from demineralized water, infused with natural fruit extracts, vitamin and minerals unlike carbonated drinks made from chemical compounds and sugar. It does not contain artificial flavours, colours and preservatives.

According to the Marketing Manager of the company, Mrs. Bose Ogunyemi, Giant Vitamin Water comes in one bottle size of 500ml but 6 delightful variants - Blackcurrant-Acai, Lingonberry-Boysenberry, Pineapple-Passion, OrangeLime, Lemon-Balm, and Prickly Pear-Kiwi.

Each variant, according to her has blend of vitamins and fruit extracts to deliver refreshing and naturally tasting hydration.

Pampers wins Moms confidence

P

ampers Baby-Dry, from Procter & Gamble, P&G Nigeria, has won the confidence of nursing mothers for delivering on its promise of superior dryness and comfort.

This was the outcome of a special event tagged ‘Moms Know Best’ held for select mothers and hosted by Pampers brand Advocate, Tiwa in Lagos penultimate week.

The event was a learning scene for no fewer than a hundred mothers who shared motherhood tips and experiences with others.

Many of the moms expressed their satisfaction on the usage of the improved Pampers diaper saying that it gives their children the needed comfort and soothes their skins. One of such is Mrs. Anike Sholanke one of the moms who attended the event from Bauchi state said that ever since she switched to Pampers Baby Dry some months ago, it provides the needed comfort for her baby.

In her words: “To say I love Pampers Baby Dry for my baby is an understatement. After my babies developed rashes from using another diaper, I decided to switch to Pampers. Since then I believe there are no diapers that compare to Pampers baby dry when it comes to versatility and affordability, Pampers Baby Dry delivers ultimate comfort to my baby.

32 — Vanguard, MONDAY, APRIL 11, 2016

(0805 220 1997)

Buhari’s compulsive leap into a debt trap I

n a recent discussion with some media practitioners, I ‘innocently’ asked the innocuous question of who actually owns the reported foreign reserve balance of about $27.8bn?

Expectedly, the response was a spontaneous chorus of “Nigeria of course”!

But, then I quickly reminded my audience of an incidence in far away China just about three years ago, when former President Jonathan and Coordinating Minister of the Economy, Ngozi Okonjo Iweala, visited Beijing with the prime objective of seeking a $1.5bn ‘soft’ loan, to IMPROVE our decayed transport infrastructure.

Incidentally, Lamido Sanusi, the incumbent Governor of CBN was also in President Jonathan’s delegation, albeit, apparently, for a different purpose. Indeed, in response to questions from journalists, Sanusi noted that, he was seeking to diversify CBN’s foreign currency reserves away from dollar holdings, and the Chinese Yuan was consequently being considered as a possible option. In essence, CBN would exchange part of its existing dollar reserves for Yuan. Thus, in farcical twist, Chinese Bankers who exchange their Yuan for Sanusi’s dollars, could also turn around and offer the same dollars, plus additional cost of borrowing to Jonathan’s delegation; in such event, Nigerians would have been sold a dummy, which will, inexplicably, still be celebrated, as a testimony of Nigeria’s credit worthiness!

Surely, it would be totally inappropriate, for Jonathan’s delegation, to have traversed the world in search of dollar

loans, when our own CBN is equally in possession of idle dollar reserves which earn minimal or nil returns.

Ultimately after the preceeding narrative, I again asked my audience, about the ownership of the present $28bn reserves?

Not surprisingly, this time, everyone chorused something to the effect that “ the CBN obviously owns the reserves”. However, news of President Buhari’s imminent visit to China in search of a $5bn foreign loan, despite CBN’s presents custody of almost $30bn, largely idle reserves, clearly evokes memories of the embarrassment of the Jonathan/Okonjo Iweala/ Sanusi earlier misadventure in China in 2013.

Surely, it would be more responsible management, with less risk to our sovereignty to borrow $5bn directly from our own CBN, than to expose the nation to increasing debt accumulation, at a time when we already require up to 35kobo from every Naira income earned to service existing debt annually. Surely, It is clearly irresponsible to compulsively seek additional loans (whether domestic or external) without first shedding the ‘excess fat’, mischievously, deliberately couched in the 2016 budget.

Indeed, President Buhari’s patriotic concern that we do not stumble into another ignoble debt trap, should have advised against further borrowing until a thorough audit of ongoing capital projects have been completed, to determine their viability and potential for positive social and economic impact.

Indeed, the President’s men should have meticulously sieved the wheat from the

chaff, with these projects and saved the Nation, the agony of losing hundreds of billions of Naira already spent on projects which are then simply abandoned for political or self serving reasons.

Similarly, it is also pertinent to interrogate why the sustenance of an unwieldy deficit and borrowing plan in the 2016 budget remains sacrosanct, when indeed, the projected revenue shortfall could have been funded from non debt sources, such as the elimination of the alleged fraudulent components of the

In essence, CBN would exchange part of its existing dollar reserves for Yuan u budget and the capture of the significant revenue accruals from loot so far recovered from corrupt public servants.

So who are the ‘smart’ civil servants who sold Buhari, the dummy of the highest ever budget deficit, despite the stark reality of dwindling revenue? Furthermore, what advised the decision to borrow over a third of the budget rather than to responsibly, cut our coat according to our cloth, so as not to compound our already oppressive debt burden, especially when additional borrowing may again become imperative to sustain expenditure in 2017, if very low crude oil prices

Business & Economy

the dollar, even when our forex earnings grossly exceed our expectations.

Nonetheless, we must ask, the question, which business CBN operates to consolidate its billions of dollar reserves?

Instructively, these reserves, are consolidated whenever CBN captures the nation’s crude oil dollar revenue and then proceeds to freshly create and directly substitute Naira allocations to the three tiers of government. Consequently, the higher the crude price and output, the bigger, also will also be the related forex earnings and the more burdensome inadvertently also, will be the volume and value of Naira substituted and injected into the money market to precipitate a disenabling market paradigm with the defining feature of too much Naira persistently chasing rations of dollars and relatively less supply of and goods and services, to invariably induce the disenabling prospect of a weaker Naira exchange rate and spiraling inflation.

Invariably, therefore, fortuitously increasing dollar revenue, will translates to increasingly bloated, distortional and disenabling excess Naira liquidity, but this process ironically expands the cache of dollar reserves from which CBN regularly auctions dollar rations in a Naira surfeit market; ultimately the Naira exchange rate becomes a product of monopolistic price setting by the Central Bank, which also invariably unilaterally determines the Naira exchange rate.

Worse still, in the guise of defending the Naira exchange rate, the CBN’s dollar auctions ultimately ironically favors the highest Naira bids against the dollar and therefore further depreciates the Naira.

Save the Naira, Save Nigerians!

persist.

Furthermore, if Buhari’s government must borrow from the domestic market, why aren’t such loans, obtained with minimal or nil cost from the trillions of idle Naira deposits, that CBN continuously borrows and warehouses as sterile funds to reduce the burden of suffocating Naira spending value in the system, despite the inordinate cost of such counterproductive loan accumulation.

Similarly, the CBN’s relatively substantial dollar reserves, which currently earn little or no yield, could also have provided a ready, and less risky source of raising the projected $4.5bn foreign loan required to partly fund the 2016 budget. Indeed, the residual reserves in CBN’s custody after such deduction, is still, i.e much more than the reserve base of most African Countries, with the exception of Algeria and South Africa.

Nevertheless, the misguided public perception still persists, that it is more economically redeeming for billions of dollars to remain as idle reserves, with CBN rather than to apply same to fund budget deficits and also eliminate the risk of borrowing externally at shylock rates, that may eventually mortgage our sovereignty. Indeed, CBN has successfully promoted this odious propaganda over time, to engender public perception that reserves in CBN’s custody are to be primarily dedicated to defending the Naira exchange rate in the currency market. This tragic faux pas is so distressing, because the process through which CBN accumulates it’s so called “dollar reserves”, is itself a disenabling framework that deliberately pressurizes the Naira exchange rate against

Enugu investment summit to reposition Minister of Foreign Affairs, state's economy Geoffrey Onyeama, have all been

By YINKA KOLAWOLE

T

he Enugu State government is set to attract prospective investors to take over the operations of identified state owned companies and corporations, for which the Enugu State Investment Summit (ESIS) scheduled to hold from April 12 – 14, 2016 will provide a platform.

The summit is an initiative of the Enugu State Economic Advisory Committee, which was set up by Governor Ifeanyi Ugwuanyi in June 2015 to advise and guide the state on the best economic policies that would C M Y K

help to engender sustainable economic growth.

A statement Ike Chioke, the Summit’s Director-General, noted that the summit will serve as a catalyst to reposition the economy of the state in a manner that the living standard of the people will be uplifted. He added that the summit is a platform through which the government of Enugu State seeks to collaborate with the private sector to promote enterprise and improve economic productivity. Minister of Power, Works & Housing, Babatunde Raji Fashola, SAN; Minister of Industry, Trade & Investment, Okechukwu Enelamah; and

confirmed as speakers at the summit.

The three-day summit with the theme, “Beyond Oil: Fostering Inclusive Economic Growth & Sustainable Development”, will bring together local and international business leaders and investors, bankers, financiers, the diplomatic community and the academia to explore Enugu’s rich potential – and the entire South-East – in a wide range of industries including agriculture, solid minerals and mining, power generation and distribution, infrastructure and real estate development, tourism and hospitality, education, ICT, media and entertainment.

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