Shareholders seek return of nationalized banks by Vanguard Media Limited

MAY 18, 2015

Shareholders seek return of nationalized banks By PETER EGWUATU

head of the sale of the last nationalised bank (Keystone Bank Limited ) by Assets Management Corporation of Nigeria (AMCON), fresh facts seem to have emerged as shareholders have called on the incoming government led by President-elect, General Mohammadu Buhari to revisit the issue of the three nationalized banks, stating that the exercise was not transparent and characterized by corruption. Meanwhile, AMCON’s spokesperson, Mr. Kayode Lambo confided in Financial Vanguard that the sale of Keystone Bank will commence this year, 2015 contrary to earlier 2014 speculated. He said: "The corporation will start the process of selling the bank with the appointment of financial advisers and will be fast-tracked. So it is likely that the sale may be completed between October and November 2015.” Recall that AMCON has so far sold Mainstreet Bank and Enterprise Bank to Skye Bank and Heritage Bank respectively. In an exclusive chat with Financial Vanguard, the Chairman, Progressive Shareholders Association of Nigeria, PSAN, Mr. Boniface Okezie, said, “We thank God that Keystone Bank, whose case is still in court over nationalization has not been sold yet. We have more facts on this issue and we want proper investigation on it by the new government. Also, investigation had shown that one of the reasons why retail investors had shown apathy to the Nigerian stock market since the meltdown in 2009 was because of the issue of nationalized banks. The retail investors suffered the loss of their investment in these banks. If the new government wants increased participation of local investors in the market, then it should investigate the C M Y K

zDemand probe into events leading to nationalization zAllege due process was not followed zKeystone Bank sale to be concluded by October/Nov issue of the nationalized banks." Continuing, he said, “If the issue is investigated properly, the government will discover discrepancies in the handling of the issue and it will be proper if the banks are returned to their former shareholders or in the worst situation, compensation be paid to the shareholders. This step, if carried out would enhance confidence and engender the participation of local

investors in the capital market. So we are using this opportunity to call on the incoming government to revisit the nationalisation of the three banks whose licences were revoked by the Central Bank of Nigeria, CBN and acquired by Nigeria Deposit Insurance Corporation, NDIC and then finally taken over by AMCON . He contended that due process was not followed as the exercise was

characterized by corruption, adding, “The nationalization of these banks amounted to unlawful and compulsory acquisition of our investment and is therefore unconstitutional, arbitrary, null and void. We have fresh facts at our disposal and we would like the new government to investigate this issue. Thank God, Keystone Bank has not yet been sold.” Continues on page 22

VISIT: Managing Director/Chief Executive Officer of Airtel Nigeria, Mr Segun Ogunsanya presenting a gift to the Governor of Osun State, Ogbeni Rauf Aregbesola (right), during a courtesy visit to the State of Osun Government House recently.

22 — Vanguard, MONDAY, MAY 18, 2015

Economy Stagflation: CBN’s inflation target unrealistic-FDC analysts By Babajide Komolafe

ROUNDTABLE: From left, Renowned economist, Dr Ayo Teriba; Prince Bimbo Olashore, Chairman Lead Capital, and Dr Andrew Nevin, Chief Economist, PricewaterhouseCoopers at an event. The trio are expected at the Chambers Roundtable today in Lagos.

Shareholders seek return of nationalised banks Continued from page 21 Speaking as well on the issue of nationalized banks, Chairman of Nigeria Shareholders Solidarity Association, NSSA, Chief Timothy Adesiyan said, “Nationalisation of these banks is a big fraud and need to be revisited for true justice to prevail. According to him “Shareholders are not happy with the CBN when it forcefully nationalized three banks belonging to us. The question is, are the three banks doing well since they were taken over by AMCON? The answer is no. Then, what is the essence of nationalizing them? We the shareholders of these banks were shortchanged and we would like the issue to be revisited and investigated because we like justice to prevail. When two elephants are fighting it is the grass that suffers.” Speaking on the issue, the National Co-ordinator, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu said, “The establishment of AMCON was intended, ab initio, to rerationalise banks and rape shareholders, the idea was an “empty boast geared towards shortchanging shareholders, to enable them give the banks to their friends. The revocation of the operating licences of the banks was an illegal policy that had clearly showcased Nigeria as an unfriendly polity for sustainable business.” In his comment, National Co-ordinator, Proactive Shareholders Association of Nigeria, PROSAN, Mr. Taiwo Oderinde said, “It is a welcome development if the issue of the three nationalised banks is C M Y K

revisited." The shareholders have been crying and calling on the government to compensate the shareholders who were not carried along when it nationalised the banks. We cannot be responsible for the inactiveness of others. In his response, Mr. Adebayo Adeleke, General Secretary, Independent Shareholders Association of Nigeria (ISAN) said “The previous CBN governor should be investigated by the Economic and Financial Crimes

We, the shareholders of these banks were shortchanged and we would like the issue to be revisited and investigated because we like justice to prevail Commission (EFCC). He should be asked to account for how the three banks were nationalised without following due process. The former CBN Governor, Mallam Lamido Sanusi never followed due process to nationalize these banks. The CBN had given September 30 for the banks to recapitalise but the investing public woke up on Friday to

hear that the three banks have been acquired. Worse still, the following Monday, new managements, boards and new names were announced for the banks. When will Nigeria’s public officials learn to obey the law?” Why the rush to nationalise, especially for banks that are publicly quoted on the Nigerian Stock Exchange, NSE?” It will be recalled that Keystone Bank , Enterprise Bank and Mainstreet bank, were totally restructured after a CBN audit showed their poor financial standing. The Asset Management Company of Nigeria, AMCON, has said it would be selling off Keystone, Enterprise and Mainstreet banks, in 2014. The three banks, formerly known as Bank PHB, Spring Bank, and AfriBank were among the banks with infractions after the Central Bank’s audit in 2009. Their situations were beyond mere bailouts and they had to be totally restructured, refunded and nationalised, to save depositors' funds. AMCON was setup to revive and stabilise Nigeria’s banking industry through the purchase of Non-Performing Loans, NPLs, of the nation’s banking industry. The 2009 banking crisis in the country, which coincided with the global asset bubble, was huge, when compared to previous industry crises, according to finance experts. The crisis of solvency liquidity and confidence affected approximately 40 per cent of the total banking system. Financial firm’s reports reveal Continues on page 23

nalysts at the Financial Derivatives Company has described unrealistic the inflation target of six to nine percent (6-9%) by the Central bank of Nigeria, given the threat of stagflation confronting the economy. Describing stagflation as low economic growth combined with high inflation, the analysts, said “Nigeria is not in a stagflation state but could be inadvertently moving in that direction.” Writing in the FDC Economic Bulletin issued on Friday they stated, “The recent National Bureau of Statistics (NBS) data showed a contraction in economic growth to 3.96 percent in first quarter of 2015 ( Q1’15) from 6.21 percent in the corresponding period of 2014. Also, the inflation numbers released for April showed the 5th consecutive increase to 8.7 percent. Hence, this is not stagflation but just a recipe or a start of the curve. “In order to stimulate growth, the government is likely to spend more through increased borrowing and advocate for a lower interest rate. This reduces unemployment and boosts growth but is likely to result in a higher level of inflation rate. Nonetheless, if the level of economic growth achieved by the accommodative policy is significant, the impact of a

high rate of inflation may be muted. The current CBN inflation target of 6-9 percent is unrealistic with the current fundamentals in play. Targeting an inflation band of 10-13% allows the CBN more room to tinker with the interest rates to stimulate growth. “Encouraging bank lending to specific sectors of the economy using subsidized interest rates alongside a more practical inflation target helps to address the looming issue of stagflation. “If policy measures by the new administration are aimed at reviving productivity and improving returns on investment, the real sector will have the incentive to lift capital expenditure. Hence, Nigeria will be on the transition path from stagflation to higher and sustainable real economic growth. “Buhari is obsessed with development and long-term competitiveness of the Nigerian economy, aimed at improving the welfare of Nigerians. He will have to deal with some trade-offs especially allowing for some inflation whilst investing significantly i.e. 10% of GDP in infrastructure to jump start the economy. There are no easy options, there are only hard choices”.

Developers seek restructuring of FMBN, FHA

evelopers in the country have called for the restructuring of government agencies in the housing sector to enable them to fulfil their mandate of providing affordable housing for the citizens. President of REDAN, Rev. Ugochukwu Chime, observed that the Federal Housing Authority (FHA) had deviated from its mandate and was now building houses for the rich. He called for the recapitalisation of Federal Mortgage Bank of Nigeria (FMBN) to boost its business and enable it deliver effectively on its mandate. He further urged the government to address all issues hindering the efficiency of these agencies. “It’s not good for you to have a bank with insufficient

funding and then say they are not performing their best, FMBN is the only agency that provides construction and mortgage financing. We have witnessed situations where the government had doled out N200 billion to those in the entertainment industry and hundreds of billions to those who are in agriculture. The housing sector deserves better since it is a basic need of man; therefore the minimum that could be invested in FMBN should be about N250 billion to recapitalise and restructure it. If we can embark on repositioning banks through the banking reform and put in place measures to ensure that banks do not have challenges as they used to have, why can’t we do the same to the FMBN?”

Vanguard, MONDAY, MAY 18, 2015 — 23

he order asking tanker drivers occupying the Oshodi-Apapa Expressway to vacate within 48 hours has made the Lagos State Government a laughing stock. When the OshodiApapa Expressway was being rehabilitated, commuters and other road users went through hell. The hellish condition was bearable to many on the consolation that once the road work was completed, there will be a relief. That was not to be. As soon as the Mile-Two end of the rehabilitation work was completed, tankers and articulated vehicles took over the road completely. It was as if the tankers and other heavy duty vehicles had decided to make the expressway their parking lot. All efforts to decongest the road failed. The police pleaded helplessness. The Navy did its best but no relief came. The Lagos State Government went on blame game, shifting responsibility to the Federal Government. In all, nothing meaningful was achieved. The tanker drivers entrenched themselves on the road claiming that they have settled virtually all the law enforcement agencies of government deployed to salvage the situation. On several occasions, workers have had to either abandon their vehicles or sleep in the office. Suddenly, and from nowhere, the Lagos State Government woke up from its long slumber and found the moral courage to ask the heartless and unrepentant tanker drivers to leave the road in 48 hours. To any first time visitor to Nigeria, he would reason that if there is anything that symbolises a dysfunctional system and ineffective governance, it is the Apapa gridlock. Apapa houses the nation’s gateway, the biggest port in the country, yet it is inaccessible. The Apapa-Oshodi Expressway links the Lagos port to the

Murtala International Airport and it is sad that both Lagos State and Federal Governments have not paid enough attention to it but rather, have been playing

Review operating policies on tanks farms, petroleum distribution politics with it. Apapa traffic gridlock is a symptom of much deeper shortcomings in the management of government business. The Federal Government has for long sold the downstream of the oil sector to a cabal who has ensured that the nation’s refineries would never work. This is to give them the lee way to continue to import refined products and line

Expressway axis of Lagos are gradually being grounded as the uncivilized and uncultured attitude of most of the tanker drivers has become unbearable. They park their tankers indiscriminately thereby blocking the highway and causing pains and discomfort to other road users as if Nigeria is in a state of anarchy and absolute lawlessness. Residents along Oshodi-Apapa Expressway are beginning to

If the pipelines were in good state, the bulk of the products the tankers are waiting endlessly to carry would have been transported seamlessly to various depots in the country their pockets with ill-gotten wealth. It is to enable the few that have access to government apparatus to import products and claim subsidy. Subsidy racket has become a big and lucrative business in Nigeria’s rental economy. If the nation’s refineries were working, the trucks will not be converging on Lagos to lift imported petroleum products from tank farms concentrated in Apapa and owned by individuals who care less about the ordinary Nigerian. Commercial activities along the Apapa-Oshodi

relocate to other parts of the state all to avoid the traffic madness on the road. Warnings in the past from well meaning Nigerians that port users will have challenges on that road and advised against locating tank farms within the ports area were ignored by the administration of former President Olusegun Obasanjo. The Obasanjo administration gave approval to all the tank farms to be situated around Nigeria’s busiest ports and many had no environmental impact assessment. This greedy, singular and callous act of ‘Executive Recklessness’ has

brought economic loss in terms of manpower and loss of valuable time to both the rich and poor. The government also failed to make the network of pipelines that link Atlas Cove to the various depots across the country work. If the pipelines were in good state, the bulk of the products the tankers are waiting endlessly to carry would have been transported seamlessly to the various depots in the country. Equally important is the fact that these cabals who own these trucks have also made the railways to fail. If the rail system had not collapsed, most of the products would also have been transported by rail at even cheaper cost. As a result of these failures, the energy to power the economy is undersupplied. And this is made even worse by a collapsing public power supply system. Many industries and business enterprises have been groaning as a consequence of energy crisis. Many have cut down on the number of work hours. Flights are being cancelled on daily basis because aviation fuel could not be supplied on account of the gridlock on the ApapaOshodi axis. Because of the convergence of trucks on Lagos ports, an unprecedented traffic gridlock has been created on the Apapa axis of Lagos with spillover effects to other parts of Lagos, leading to considerable loss of

man hours. Generally, the toll on the welfare of citizens is profound. The government should immediately review the operating licenses granted to tank farm operators. Those without adequate facilities across the country where product can be discharged in bulk should be eased out of the business. Products should not be discharged at the Apapa port alone. Those to serve the Niger-Delta should go to Warri, Koko ports while those for East should be discharged at Port Harcourt. The participation of the NNPC in the supply chain should be discontinued and the private sector should be allowed to operate in a fully deregulated regime, subject to appropriate guidelines. Existing pipelines should be privatized or leased to tank farm owners to operate. The current model is clearly not working for Nigerians and government should put an end to it. Nigeria needs to make the rail system work as well. For an economy of the size of Nigeria to be efficient in every sense, it must have a functional rail system. The review of the entire distribution chain in the downstream of the petroleum sector is needed urgently. It is hoped it will be the first change that Nigerians will see in the APC- led Federal Government whose magical pass word is change.

Cover

Shareholders seek return of nationalised banks Continued from page 22 the financial cost of the intervention is now in excess of N5 trillion, aside shareholder values destroyed. It will be recalled that some shareholders had taken AMCON to court and the case has yet to be finalized. At the last ruling, a Federal High Court in Lagos refused to dismiss a suit filed by some shareholders of the defunct Bank PHB Plc (now Keystone Bank) against the CBN, AMCON and three others over the forced acquisition of their

shares. While ruling on a preliminary objections filed by the defendants to challenge the jurisdiction of the court, Justice Mohammed Yunusa held that as shareholders, the plaintiffs have a say in the bank and that no arm of government can take away a citizen’s right to acquire or hold property; therefore, there can be no compulsory acquisition of the shares. The plaintiffs are challenging the alleged illegal transfer of their shares to Keystone Bank

without compensation. They are also demanding the sum of N38.6 billion from the defendants being “fair compensation” to them for the value of their investment in Bank PHB Plc. The shareholders are further asking the court for an order setting aside the alleged unlawful nationalisation, compulsory acquisition and expropriation of their investments in Bank PHB, and are seeking N20 billion as damages for the loss of value of their investments in Bank PHB.

The defendants in the suit are CBN, Keystone Bank, AttorneyGeneral of the Federation and Nigeria Deposit Insurance Corporation (NDIC). The plaintiffs claimed that NDIC on August 5, 2011, wrote Bank PHB’s Managing Director informing him that the bank’s assets and liabilities have been transferred to Keystone Bank without any form of adequate compensation to the shareholders. The plaintiffs are praying the court to declare that the action amounted to unlawful

compulsory acquisition of their investment and is therefore unconstitutional, arbitrary, null and void. But the defendants in their preliminary objections to the suit, urged the court to strike it out for lack of jurisdiction. According to their lawyer, Kola Awodein, the shareholders did not bring the action properly before the court thereby robbing the court of the jurisdiction to hear it.

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Vanguard, MONDAY, MAY 18, 2015 — 25

Business & Economy BY GODFREY BIVBERE

iversion of Oil and gas cargo to neighbouring countries' ports is imminent following the recent directive by the new management of the Nigerian Ports Authority, NPA, that all oil and gas vessels should henceforth go through Intels facilities in Onne, Rivers State. Members of the Association of Nigerian Licensed Customs Agents (ANLCA) and others have threatened to divert oil and gas cargoes to neighbouring countries unless the directive is rescinded. The association which decried government’s moves to grant such monopoly said that it would instruct its members and principals who handle oil and gas cargoes to henceforth direct their vessels to boycott all Intels-controlled seaports, unless the directive was reversed. National President of the association, Prince Olayiwola Shittu, who spoke on the issue said what the Federal Government has done was very irresponsible. “What they are doing is creating a monopoly that is anti-people, and not in the interest of the economy,” he said. “Everybody should have a choice of where they want to take their cargoes to. The government concessioned the ports, all of them (concessionaires) signed the same documents. Why do you have to force people to take their cargo to Intels…so that they can charge them in dollars, and not only that, their charges are 300 times more than regular charges in

Leap Africa MSME forum focuses risk mitigation

BRIEFING: From Left, Dr Bimbo Ogunkelu (former Minister for Integration and Chairman, CHESTRAD), Dr Lola Dare (President, CHESTRAD International) and Mr. Bolaji Shenjobi (Board Member) at a Press briefing by CHESTRAD International on Thursday where a new philanthropic NGO, “I Will Give” was introduced to the Nigerian public.

Cargo diversion looms over NPA's order on oil, gas other ports. “We have started our campaign also to call for the boycott of all Intels’ ports facilities. In addition, we are prepared to take our oil and gas goods through Cotonou. If that discrimination is going to happen, then we go through the border. “It is very unfortunate because Intels have been a problem and it is like a country, a sovereign of its

own. That is because the promoters are holding the government and Nigerians by the jugular. It is very unfortunate”. The ANLCA President criticised out-going government of President Goodluck Jonathan for embarking on some recent controversial appointments, which he described as deliberate plots to create problems for its successor. “Like many things the out-

Economic woes worsen as NLNG’s revenue drops by 30% BY MICHAEL EBOH

igeria’s dwindling revenue profile is expected to worsen further, as the Nigeria Liquefied Natural Gas, NLNG, yesterday said it has recorded a 30 per cent decline in its revenue as at April 2015. Specifically, NLNG had in 2014 paid about N220 billion into the coffers of the Federal Government for Corporate Income Tax. This amount does not include the sum the NLNG pays the country as dividends for its 49 per cent holding in the company. NLNG puts Nigeria’s overall earnings from the company at over 70 per cent,

comprising the 49 per cent dividend, 30 per cent Corporate Income Tax (CIT) and other taxes. Speaking at the External Stakeholders Forum as parts of activities marking the NLNG Commercial Week 2015, Deputy Managing Director of the company, Mr. Isa Inuwa, stated that NLNG’s revenue was impacted by the falling crude oil price and the low consumption of its products. He said, “Our prices are indexed to crude; at least a significant portion of our portfolio. The price of gas is indexed to Brent, hence if there is a fall in the prices of Brent; it means we will sell for less.” To cushion against the effect of the declining crude

price, Inuwa stated that the NLNG is looking at its operating model and is considering increasing its gas output. To this end, he stated that the company is investing in the upstream sector to ensure continuous gas supply and feed stock to its plants in quantity that will enable it meet the contractual obligations to its customers and also deliver value to its shareholders. He further stated that between year 2020 and 2021, the agreements and contracts on its Trains one to three, with a capacity of 10 million tonnes, are expected to come to an end, adding that the NLNG has already developed an aggressive marketing strategy to re-market the Trains and it will be looking at destinations and buyers for its commodities.

going government is doing now, I think they are just out to create problems for the new administration. We should be talking about the in-coming government, not the out-going one that is just creating boobytraps all over the place for its successor,” he said. The ANLCA leader, however, opined that such “booby-traps can be dismantled by the in-coming government if they can put their acts together. “While tackling the issue of the economy, he (in-coming President Muhammadu Buhari) should also be looking into the Maritime Industry. The maritime industry is a very viable avenue for government to meet its revenue needs. If we can raise up to N7 trillion annually from the industry, and our current budget is N4-5 trillion, then we should be able to break even. “So the in-coming administration should look into all these, all the hurried appointments and commitments they are making now, the first step for them is to repudiate all these actions they know are not in the interest of the common man,” Shittu said. The directive which is seen as very unhealthy monopoly came on the heels of growing concern among stakeholders over the controversial sack of the former MD of the NPA, Mallam Habbib Abdullahi, and his replacement with Alhaji Sanusi Lamido AdoBayero, whose family is alleged to have substantial interest in Intels.

eap Africa has concluded arrangements to host Small and Medium Scale Enterprises, SMEs with the aim of sensitising them on how to maximise profit and mitigate risk in their businesses. Specifically, LEAP Africa, a leadership development organization and its partners will converge 800 SMEs at the 10th edition of the CEOs Forum under the theme: Staying Ahead: Maximizing Profit and Mitigating Risks. The speakers will deliberate on sectoral and industrial risks; the need for SMEs to concentrate their efforts on evaluating and managing their risk exposures for long-term sustainability. Well-known industry business leaders, entrepreneurs, risk management experts in Nigeria’s business sector – Mr. Dharnesh Gordhon, MD/ CEO; Nestlé Nigeria Plc., Mrs. Peju Adebayo, Managing Director, Lafarge Cement Wapco Nigeria; Mr. Wole Oshin, Managing Director, Custodian and Allied Insurance Plc and Mrs. Clare Omatseye, Founder/ Managing Director, JNC International Nigeria Ltd will lead high-level discussions at LEAP Africa’s CEOs Forum for SMEs in Lagos. According to Iyadunni Olubode, LEAP Africa’s Executive Director;”SMEs should be proactive in managing risk instead of being reactive. There is a common misconception that only large companies need to manage risks, but this year’s CEOs Forum seeks to address that and offer practical advice for entrepreneurs on protecting their profits through risk mitigation strategies”. Studies show that poor risk management systems hinder growth, performance and expansion. Although many local companies are increasingly conscious of risk facing their business and the importance of curtailing them, few know measures for controlling risks. The forum will provide cutting-edge solutions and best practices in corporations to enable SMEs deal with risks in present political and economic realities in Nigeria.

26 — Vanguard, MONDAY, MAY 18, 2015

Business & Economy

NIRP to boost annual manufacturing revenue by N5trn —Aganga BY JOHNBOSCO AGBAKWURU

HE Minister of Industry, Trade and Investment, Mr. Olusegun Aganga has said that the Nigeria Industrial Revolution Plan, NIRP, would boost the annual revenue earnings of the Nigerian manufacturers to about N5 trillion per annum. The Minister who stated this at the annual Mechanical Engineers Distinguished lecture with the theme: “The Automative Industry and Nigeria’s Industrialisation” in Abuja explained that the goal of the NIRP was to increase the contribution of the manufacturing sector Gross Domestic Product, GDP, from the present seven per cent to more than 10 per cent over the next five years. He said that President Goodluck Jonathan in a bid to strengthen the economic base of the country had launched the NIRP and the National Enterprise Development Programme, NEDEP, to usher a new era for industrial, micro, small and medium enterprises development in the country. According to him, “The NIRP is the most ambitious and comprehensive roadmap that would transform the nation’s industrial landscape, boosts skills development, enhances job creation and conserves foreign exchange. “It is the flagship industrialisation programme ever embarked upon by this country. It will fast-track industrialisation, accelerate inclusive economic growth, job creation, transform Nigeria’s business environment and stop the drain on our foreign reserves caused by importing what we can produce locally.” Aganga said that the NIRP was ambitious and comprehensive because it was based on the sectors that the country has competitive and comparative advantages such as agro-allied, metals and solid minerals, oil and gas industrial activities and construction, light manufacturing and services. He said, “These are sectors where Nigeria could be number one in Africa and in the top 10 globally. The NIRP is geared towards addressing all the major physical constraints impeding industrialisation and aims at improving the nation’s investment climate and promote the patronage of made-in-Nigeria products.”

Nigeria loses N7bn as Shell shuts Trans-Niger Pipeline By Michael Eboh with Agency Report

arring other arrangements, Nigeria has lost a minimum of $35.139 million, about N7.029 billion, over the last three days, as Shell Nigeria, yesterday, said it has shut down the 180,000 barrels of crude oil per day Trans Niger Pipeline. According to a statement by Shell, the company shut down the pipeline, May 12, but failed to state the reasons for the shut down and when it would be reopened. The Trans Niger Pipeline is critical to Nigeria’s crude export as it carries Nigeria’s crude oil, Bonny Light, to an export terminal. Traders told Reuters that Bonny Light loadings have been delayed by up to four days over the past week. The Trans Niger Pipeline, according to Shell, transports around 180,000 barrels per day of crude oil to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation and liquefied gas exports. The Central Bank of Nigeria puts the average price for Bonny Light at $65.07 per barrel. This means that for every day that the pipeline is shut, Nigeria will be losing a minimum of $11.713 million, about N2.343 billion. The Nigerian National Petroleum Corporation, NNPC, had a couple of weeks ago, lamented the recent increase in the attack on crude oil and gas pipelines across the country, stating that the country is losing about 60,000 barrels of crude oil and condensates daily whenever there is a pipeline break. The NNPC had also stated that over 50 attacks were launched by vandals on the nation’s crude oil and gas pipelines in the last six months. Group Executive Director, Gas and Power of the NNPC, Mr. David Ige, had stated that apart from the loss of revenue from crude sales, the vandalisation of the pipeline is expected to worsen the country’s power situation as a number of power plants relying on gas supply from the pipeline will be starved of gas to generate electricity.

Ige lamented that between January and February 2015 alone, the Trans-Forcados crude oil pipeline was attacked and vandalised four times, adding that none of the corporation’s gas pipelines has been able to run two straight days without being brought down. Ige, however, stated that the NNPC was exploring a number of options on how to tackle the pipeline vandalism menace, ranging from an aggressive community engagement to installation of technological gadgets to stave off the vandals. He called for a

holistic approach to resolving the pipeline vandalism scourge ranging from tightening security to expeditious judicial enforcement, to bring to an end the menace which has deprived the country of several billions of revenue. Also, Nigerian Gas Company, NGC, a subsidiary of the Nigerian National Petroleum Corporation, NNPC, had in few days ago, stated that Nigeria has lost a minimum of N8.04 billion since January, to the incessant vandalism of gas pipelines. Managing

Director, NGC, Mr. Dafe Sejebor, disclosed that since the beginning of this year the country has witnessed an unprecedented increase in the spate of gas pipeline vandalism. He added that within the last two months, it has recorded three major attacks on its pipeline network, mainly in the Niger Delta region. According to him, whenever these pipelines are sabotaged, we are forced to shut down the pipeline, and we defer a minimum of 200 million Standard Cubic Feet, SCF, of gas per day.

CONFERENCE: From left, Computer System and Network Engineer, Covenant University (CU), Prof. Samuel John; Adviser, Ivory Banking, Heritage Banking Company Limited, Titilayo Babaoye; Chairman, Planning Committee, Prof. Olawale Daramola and Dean, College of Science and Technology, CU, Prof. Chinedu Shalom, during the Covenant University’s International Conference on African Development Issues at the University’s Campus in Ota, Ogun State.

Suspend evacuation of petroleum products by road — Terminal operators BY GODWIN ORITSE

EMBERS of the Seaport Terminal Association of Nigeria (STOAN), have called for the immediate suspension of petroleum products delivery by road with a view to resolving the Apapa traffic gridlock. Chairman of STOAN, Princess Vicky Haastrup said that the gridlock being experienced in Apapa is a direct consequence of system failure in the oil and gas industry logistics chain. Haastrup also said that the only way to solve the gridlock is to immediately suspend the lifting of imported petroleum products from tank farms by road. “There is an over-concentration of oil tank farms in Apapa, an area predominantly designed for port operations. There is now a situation where we have proliferation of oil tank farms without regards for the safety logistics implication.

“I issued a warning over five years ago advising government to discontinue tank farm operations in Apapa but nothing was done. The problem is now staring all of us in the face. “Port operations have been brought to a virtual standstill as a result of this chaos created by tank farm and oil tankers and it does not look like anyone is doing anything drastic about it. “We have a situation where over 10,000 tankers descend on Apapa daily and when you add this to the number of conventional trucks on routine maritime operations, it is not surprising that we have the kind of gridlock we are currently witnessing,” she said. She lamented that there are about 60 tank farms operating in Apapa. On the immediate solution to the problem, Haastrup said, “There must be immediate suspension of the evacuation of petroleum products from Apapa by road. The authorities must immediately activate the use of barges in petroleum products evacuation."

Vanguard, MONDAY, MAY 18, 2015 — 27

Banking & Finance

BVN: The banking public and the June deadline BY BABAJIDE KOMOLAFE

ank customers across the country have thirty three days from today to enrol for the Bank Verification Number (BVN) However there are issues concerning how many customers would have enrolled for the exercise by the deadline, even as stakeholders in the banking industry have stepped up efforts to highlight the benefits of the initiative for the country as a whole. The BVN was introduced by the Central Bank of Nigeria and was launched February 14 th last year. It is the registration of customers in the financial system using biometric technology. Biometric technology involves the process of recording a person’s unique physical traits such as fingerprints and facial features. This record can then be used to correctly identify the person afterwards. Once a person’s biometrics has been properly captured, the person is given a Bank Verification Number or BVN. According to the CBN, The objective of the BVN initiative is to protect bank customers, reduce fraud and further strengthen the Nigerian banking system. Fraud is reduced because no two people have the same biometric information. Banks will therefore be able to check the features of a person doing a transaction against the record, which the bank has captured thereby correctly identifying the owner of an account. Enrolment To enroll for the BVN, bank customers have to visit a branch of their bank, complete and submit the BVN enrolment form, after which, the biometric information such as fingerprints and facial imagery are recorded. The customer is then issued an acknowledgment slip with transaction ID. Thereafter, BVN is created and the customer is alerted via SMS to arrange for pick-up. Fast-Track Measures In order to fast-track enrolment of customers for the BVN, the CBN October last year, stipulated targets and deadline for banks. The apex bank also made the BVN a condition for accessing loan. The CBN stated in circular, “In order to fast-track the enrolment process: DMBs are expected to give attention to enrolment of their customers; All DMBs are required to enrol at least, 40 percent of their

Emefiele, CBN Governor customers on or before 31st December 2014, and 70 percent on or before 30 th March 2015; All DMBs are required to fully integrate

untrue by the Nigeria Interbank Settlement System (NIBSS). Secondly, customers with accounts in various banks, who have enrolled for

Once banks are able to identify and blacklist fraudulent customers, they would be encouraged to extend loans to those customers that are credit worthy their core banking system, latest by 31st October 2014, to ease the enrolment process; All new loans must have the BVN as condition precedent to drawdown, with effect from 3rd November 2014; All credit customers must have BVNs by 31 st December 2014; The Central Bank of Nigeria will monitor compliance”. Issues Though, banks have stepped up efforts to publicise the BVN, in order to meet these deadlines, there are however concerns about ensuring that all bank customers have been captured and issued with the BVN before the June 30 th deadline. For example, investigations reveal that some bank customers are yet to receive their BVN months after they have been enrolled, a development dismissed as

the BVN in one bank, may not have supplied their BVN to the other banks, hence confusing the industry about the actual number of account holders that have been enrolled for the BVN. In addition to these is the issue of account holders based outside the country, and how to ensure they are enrolled for the BVN. Beyond these is the threat of fraudsters, who have been sending fake BVN Validation email to bank customers. One of such messages read, “Dear Valued Customer, this is to bring to your notice that your account has been listed to be de-activated. This is because you have not validated your Biometric Verification Number with your online account. Follow this reference to START VALIDATION. All information must be filled correctly.

NOTE: All ATM and internet banking channel will be disabled and your remote access will be blocked within 12 hours failure to comply.” Stakeholders drum up support Meanwhile, stakeholders in the banking industry have stepped up efforts to highlight the various benefits of the BVN. According to the Managing Director of the Nigeria Interbank Settlement System (NIBSS), Mr. Ade Shonubi, the BVN initiative, by helping banks to identify and blacklist fraudulent customers, will help to boost retail credit in the banking industry. The NIBSS boss, who is responsible for the implementation of the BVN, in a statement, explained that once banks are able to identify and blacklist fraudulent customers, they would be encouraged to extend loans to those customers that are credit worthy and do not have any record of being delinquent borrowers. Shonubi said, “When the BVN project came up, there were three key things. First and most important of all is for us to identify our customers and to identify them uniquely across banks and across accounts. So, once you have BVN, even if you have 10 bank accounts, it is the same BVN that will be tied to the bank accounts. Now, relating to identifying is the possibility of banks blacklisting people who have committed financial infractions. It could be fraudsters; it could be people who have gone to forge documents because what happens today is that the same guy will go to a bank, commits fraud, then runs to another bank and because there is no way of tying all these activities across. So, we found out that there were quite a lot of losses related to these individuals from one bank to another. On his part, Executive Director at Sterling Bank, Mr. Abubakar Suleiman said that Bank Verification Number (BVN) initiative, when fully implemented, will help to curb arbitrage in the foreign exchange market. Suleiman, who disclosed this at an interactive session with newsmen in Lagos, explained that with the BVN, each bank customer will have a unique identification, which will make it easy to prevent people from flouting the Central Bank of Nigeria’s (CBN) recent policy on the use of naira denominated debit cards for transactions abroad.

Sterling Bank holds parenting series workshop

n furtherance of its commitment to the development of education in Nigeria, Sterling Bank Plc in partnership with Caleb Group of Schools has concluded plans to hold the second edition of the Parenting Workshop under its One Education Initiative. The workshop is aimed at educating parents and guardians on how to nurture their children and bring out the best in them. The theme of the workshop is ‘Enhancing your child’s capacity for learning’. The Bank in a statement signed by its Group Head, Strategy & Communications, Mr. Shina Atilola described the Parenting Series as a family growth and education initiative designed to support parents’ desire to optimize the potentials and talents of their children. He noted that the purpose of the workshop is to aid parents and guardians in dealing with topical issues that affect the upbringing and training of their wards in the 21 st century vis-à-vis the practical day-to-day realities of life in Nigeria. The Bank’s Chief strategist said the involvement of the Bank in the second edition of the workshop was informed by the overwhelming turn-out of parents who attended the first edition, adding that the Bank will continue to invest in initiatives that add value to the lives of people in line with its purpose.

UBA, MTN others battle for Remita’s RC3 Cup

he need for corporate executives to cultivate a healthy lifestyle through active participation in sports is the focus of this year’s Remita Corporate Championship Cup [RC3] football tournament which kicked off over the weekend with UBA, MTN, Etisalat and others commencing battle for football supremacy in the prestigious event. While addressing the media in Lagos, Managing Director and CEO of SystemSpecs [owners of Remita, an electronic platform for receiving and making payments], John Obaro, explained that it is pertinent for corporate executives to maintain healthy lifestyles that can position them to be part of “healthy companies”.

28 — Vanguard, MONDAY, MAY 18, 2015

Banking & Finance

BY PROVIDENCE OBUH

PayAttitude, Unified Payments offer innovative retail payments

nified Payments Services Limited and PayAttitude have unveiled PayAttitude, the first-ever interoperable multi-bank Chip+PIN and Offline/ Online contactless solution for retail banking in the country. Speaking at a formal launch of PayAttitude in Lagos, Managing Director/CEO, Unified Payments, Mr. Agada Apochi, explained that PayAttitude is a revolutionary step forward in Nigeria’s retail commerce and banking sector: He said, “PayAttitude guarantees subscribers the confidence and comfort of successful payment for goods and services at merchant locations at all times notwithstanding the challenges of telecommunication at the Point of Sale (PoS) terminal or the unavailability of network of the Subscriber’s bank. It is also compatible with works on all types of mobile phone handset and all networks, making it possible for the phone handset to be used for retails payments at Points of Sale. PayAttitude uses Near Field Communication (NFC) technology to achieve seamless interaction between the subscriber ’s phone handset and PoS terminals”. Two variants of PayAttitude; PayAttitude Debit and PayAttitude Prepaid/Mobile guarantees convenient, safe and secure transactions for subscribers. Also, Country Manager, PayAttitude, Mrs. Titilayo Olubiyi, added: “The difference between the two variants is that Prepaid/ Mobile can be obtained at authorised agent locations without a bank account while the Debit is used with bank accounts thereby delivering on the objectives of Agency Banking and Financial Inclusion. “PayAttitude is easy for anyone to use, just visit any participating bank or authourised retail outlet to get your Tag, attach to your mobile and at any POS anywhere, tap and welcome to a world of mobile transactions made easy and secure”, Olubiyi said.

REMITA SEASON 2: From left, Executive Director, SystemSpecs [owners of Remita e-payment platform], Deremi Atanda, Brand Ambassador, Remita Corporate Champions Cup and former Super Eagles goalkeeper, Peter Rufai and MD/CEO, SystemSpecs, John Obaro chatting at the Season 2 of Remita Corporate Champions Cup at the Campos Stadium Lagos at the weekend

CBN hides banks’ interest earnings on standing deposit facility BY BABAJIDE KOMOLAFE

he Central Bank of Nigeria (CBN) has stopped publishing how much banks are making by lacing their excess liquidity as deposit via its Standing Deposit Facility (SDF) This follows Vanguard Newspaper ’s report, on the huge amount of money banks made placing deposit with the apex bank.

Banks access the SLF to borrow from the CBN while they access the SDF to place deposit with the CBN. Presently the CBN charges 15 percent as interest rate on loans to banks through the SLF while it pays 11 percent as interest on deposit placement through the SDF. In January, Vanguard exclusively reported that banks earned N27.26 billion as net interest earned from placing their excess liquidity as deposit with the CBN in one year. Vanguard investigations revealed that from October

2013 to September 2014, banks placed N81.85 trillion as deposit with the CBN through the SDF and borrowed N5.14 trillion through the SLF. Further, the CBN paid interest of N32.9 billion on the deposit through the SDF, while it earned interest of N3.68 billion on loans to banks through the SLF. Consequently the CBN, in its Economic Report for January, and Economic report released last week, omitted information on how much banks made by placing their money as deposit via the SDF.

Rather, the apex bank limited its report to how much it lent to banks via the SLF and how much banks placed as deposit via the SDF. The CBN Economic report for January stated, “ The total request for the standing lending facility (SLF) in the month of January 2015 was N67.79 billion, reflecting a daily average of N9.68 billion for the 7 transaction days in the month, compared with total request of N1,115.38 billion with a daily average of N61.97 billion in 18 transaction days in December 2014. “Standing Deposit Facility (SDF) totalling N2,282.36 billion was received. This represented a daily average of N126.80 billion for the 18 working days in the month, representing an increase of 181.8 per cent over the level in the preceding month, a reflection of the liquidity condition in the market. Similarly, the Economic report for February stated, “The total request for the standing lending facility (SLF) in the month of February 2015 stood at N1,060.01 billion, consisting of N154.50 billion (direct SLF) and N905.51 billion (Intraday Lending Facility converted to overnight repo), reflecting a daily average of N66.25 billion for the 16 transaction days in the month, compared with a total request of N75.39 billion, with a daily average of N9.42 billion in 8 transaction days in January 2015. “Transactions at the Standing Deposit Facility (SDF) window amounted to N794.28 billion. This represented a daily average of N46.72 billion for the 17 working days in the month, reflecting a decline of 69.14 per cent below the level in the preceding month.”

Heritage Bank boosts financial literacy with ‘My Day as a Banker’ H

eritage Bank has offered school children across the country an innovative way to celebrate this year ’s Children’s Day through the ‘My Day as a Banker’ experience. Designed to spice up the May 27 th Children’s Day celebration with innovative and fun filled way to experience the world of bankers, ‘My Day as a Banker’ is a Bank-wide activity on Monday May 25th, where selected secondary school pupils will have the opportunity of handling various banking roles such as tellers, customer service associates etc.

Managing Director/Chief Executive, Heritage Bank, Mr. Ifie Sekibo said that ‘My Day as a Banker’ is a demonstration of the bank’s commitment to innovation. “Children are very special to us at Heritage Bank, hence we decided to celebrate them in a unique way that offers opportunity to have fun and learn about banking. ‘My Day as a Banker’ is also Heritage Bank’s unique way of promoting financial literacy among children, which is the core essence of the HB Bud Savings Account, specially designed to promote savings habit among children and youths.

In addition to the My Day as a Banker, Heritage Bank has lined up series of fun filled events to mark the Children’s Day Celebration. The events will be anchored by the Heritage Bank Financial Literacy Brand Ambassador, Zuriel Oduwole, the youngest child to have interviewed 9 Incumbent Presidents. The events include Treasure Hunt at School on Wednesday May 20th and at the Bank on Friday May 22nd, during which Pupils are expected to locate their fairy god parents from clues designed for them and get a ticket to the Children’s Day carnival. The god parents are selected Group Heads of

Heritage Bank, who would package and offer very substantial gifts to the pupils. Furthermore, Heritage Bank will hold a Children’s Day Carnival on Wednesday May 27th at Dreamworld Africana Amusement Park by Chevron Toll Plaza Lekki Expressway – in partnership with Inspiration FM. Customers who have the Heritage Bank children account – “Bud Account” stands a chance to win tickets to the carnival. Tickets can also be purchased at any Heritage Bank experience Centre. The carnival offers exiting fun filled experience including bouncing castle, fun rides, loads of food and drinks and plenty more.

Vanguard, MONDAY, MAY 18, 2015 — 29

Corporate Finance

N16bn dividend awaits Lafarge shareholders By PETER EGWUATU

afarge Africa Plc shareholders are expected to reap from the company’s consolidation as its Board of Directors is expected to propose a dividend of N16 billion at its forth coming Annual General Meeting, AGM. Vanguard reliably gathered that the Board would proposed a dividend of N16 billion to its shareholders at an AGM expected to hold next week. It will be recalled that the shareholders last year gave the Board approval to consolidate the businesses of the company in Africa into a stronger group. The creation of Lafarge Africa has transformed the company into a group which is well equipped to continue the acceleration of a group to withstand challenges in the market place. It was gathered that company’s current production capacity has grown from 4.5 million tons to about 12 million tons. In addition, 3.5 million cubic meters of ReadyMi coco creates and over 5.0 million tons of Aggregates have been added to the portfolio.The improvement shows that the company’s decision to consolidate has been a wise one. Company’s profile: Lafarge Africa Plc was renamed following the consolidation of Lafarge S.A indirect assets in Nigeria and South Africa into the erstwhile Lafarge Cement WAPCO Nigeria Plc. The assets that were transferred to Lafarge Cement WAPCO Nigeria Plc included: Lafarge South Africa Holdings (Pty) Limited; United Cement Company of Nigeria Limited, through Egyptian Cement Holding B.V.; Ashaka Cement Plc; and Atlas Cement Company Limited. Following the transactions, the name of the company was changed to Lafarge Africa Plc in order to reflect its new reach and positioning. Lafarge S.A. of France, controls 72.74 per cent of Lafarge Africa the remaining 27.26 l is held by Nigerian and foreign, institutional and individual investors. Lafarge S.A. of France is a world leader in building materials with a presence in 62 countries across the Globe. Consequently, Lafarge Africa is able to take advantage of

and benefit from Lafarge S.A.’s management and technical expertise. Business consolidation: The business consolidation that took place last year happened following the endorsement given the shareholders at a meeting in Lagos. Speaking after the shareholders’ approval, Osunkeye had said, “The overwhelming majority of our minority shareholders were strongly supportive, which reflects that they see the strong value opportunity in the creation of Lafarge Africa. Lafarge Africa is not only a value enhancing transaction for shareholders but it will

provide significant value to all stakeholders through the creation of a Nigerian listed Sub-Saharan Africa building materials giant that will be better able to support the development needs of our continent.” Speaking in the same vein, Group Managing Director/ Chief Executive Officer, Guillaume Roux, said: “The creation of Lafarge Africa allows the company to continue in its drive to be the best in the areas in which it operates. The broader geographic coverage means that Lafarge Africa will be better positioned to serve its customers more widely. It also

places the company in a stronger position to be able to benefit from the economic growth and development opportunities available in both Nigeria and South Africa.” Financial Performance: Lafarge Africa Plc, ended 2014 with an operational Profit afterTax of N37 billion, which is eight higher than prior year, after adjusting for one-offs. Cash of N49 billion was generated from the operations, while a dividend of N3.60 per share was recommended for the shareholders, up nine per cent above what was paid the previous year.

PRESENTATION: From left, Head, Listings Sales and Retention, Nigerian Stock Exchange (NSE), Mrs. Taba Peterside; Executive Director, Business Development, NSE, Mr. Haruna JaloWaziri; Chairman, Courteville Business Solution Plc, Group Capt. M. O. Salami (Rtd) and Group Managing Director, Courteville Business Solution Plc, Mr. Adebola Akindele at the Facts Behind the Figures presentation at the exchange.

NSE, NIM partner on capacity building BY JONAH NWOKPOKU

he Nigerian Stock Exchange, NSE and Nigerian Institute of Management, NIM have commenced negotiations for a capacity building partnership for all operators in the Nigerian Stock Exchange. This was made known when the President and Chairman in Council, NIM Dr. Nelson Uwaga paid a courtesy visit to the Chief Executive Officer of NSE, Mr. Oscar Onyema in Lagos. The NIM boss said the institute is desirous of running collaborative customised courses with the Exchange for the management staff of all listed companies and that NIM is equally soliciting the Exchange to support NIM by marketing its sundry local and foreign training programmes to listed companies. He said: “The Institute requests the Exchange to encourage the management staff of its listed companies to take up partnership of NIM by recommending the possession of the Institute’s professional management

certificate as a prerequisite for the purpose of employment and promotion to certain managerial positions in listed companies. “The Institute is willing to organise an accelerated membership training programme for members of staff of listed companies. Thereafter, the beneficiaries will be admitted into the institute’s membership through a special induction programme.” He added: “As part of the collaborative arrangement between our organisations, the NIM will support the Exchange by encouraging the unlisted companies to get listed with the Exchange knowing the huge benefits. The institute is willing to sign memorandum of understanding with the Exchange to cover all areas of proposed collaboration.” In response, the CEO of NSE, Mr. Oscar Onyema said: “This visit is very relevant to us. We look forward to collaborating in areas where we have common interest in terms of building managerial capacity to grow the businesses in Nigeria and enhance corporate governance as well.

Champion Breweries grows turnover to N3.3bn, returns to profitability

hampion Breweries Plc has recorded substantial improvement in its trading results with a record leap in turnover from N2.2 billion recorded in 2013 to N3.3 billion in 2014. The Company which has repositioned to attract credit, also returned to profitability and generated a profit of N25.5 million as against a loss of N543.9 million declared for the previous year. The chairman of the Company, Chief Senas Ukpanah who stated this last week in Lagos at the company ’s 39th Annual General Meeting put the company’s loss before tax at N1.07 billion from N1.73 billion recorded the previous year. This, according to him, was due to high impact of finance cost of N1.08billion as against the previous figure of N1.18billion. Chief Ukpanah commended shareholders for supporting the last recapitalization exercise of the Company, saying the N13.7 billion rights issue was successful as it was over-subscribed by shareholders. While lamenting the challenging economic environment under which the company operates, he said “despite the overall stagnating market, Champion Breweries was able to achieve operational profits as well as complete pay-off of its longstanding debts and reduced the interest burden carried over the years”. Chief Ukpanah, who expressed optimism on bright prospects for the Company said “our ship has set sail to navigate into greater heights and positive prospects. Strategies are being put in place to grow our dear brandChampion Lager Beer- and significantly expand our markets within the SouthSouth region in the incoming years”. The shareholders applauded the Board’s effort and the turnaround plan being implemented for the Company while appealing for more efforts by the Company Management to make Champion Lager Beer more competitive.

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30 â&#x20AC;&#x201D; Vanguard, MONDAY, MAY 18, 2015

Corporate Finance

Printing industry needs incentives, duty free importation - Oladipo p

BY PETER EGWUATU

r. Segun Oladipo is the Managing Director/Chief Executive Officer, Learn Africa Plc. Learn Africa is a quoted company on the Nigerian Stock Exchange, NSE. In this interview, Mr. Oladipo spoke on issues affecting the printing industry, challenges facing the company and its financial performance amongst others. Excerpts: As a publishing company, how has the insurgency in the northern region of the country affected your business? The deadly activities of the insurgents have destroyed economic and commercial activities in the affected states. The frequent bombings and clashes between Boko Haram members and the law enforcement agents have forced many companies to close their offices while others have substantially reduced their operations and business hours. The general feeling of uncertainty and insecurity in those areas has made many investors to relocate their businesses to safe areas. As a company, we are greatly concerned about this terrible situation which has limited our promotional activities and revenue generation efforts. Our sales and marketing operatives have not been able to move extensively in order to sell the full benefits of our excellent learning resources to the teachers, school administrators and other influential persons in the educational sector. As a matter of fact, several schools have been closed down due to the destruction of facilities, widespread killings and threats to the lives of students and their teachers. Besides, bookshops and other sales outlets have stopped operating due to high level of insecurity. Many of the teachers in those areas have also lost the opportunity to update their knowledge and upgrade their skills through attendance at capacity building events like the seminars and workshops that we organized in several locations across Nigeria. What steps have you taken to overcome the difficulties caused by the insurgency in the northern region? We have reduced our

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business activities in the troubled areas in order to protect the lives of our employees and our company â&#x20AC;&#x2122;s assets. In addition, we have allocated more resources to the identification and exploitation of business opportunities in other parts of the country. More sales representatives have been employed to saturate schools in the safe areas with vigorous promotions of our new and backlist titles. Furthermore, we have purchased additional vans to enable the mobile sales teams to distribute our products to wider areas. We have also increased the frequency of our strategic meetings with teachers, school proprietors, school administrators, government officials and booksellers across the country, in order to increase the level of patronage that our products currently enjoy. What are the challenges that the publishing industry is facing apart from piracy which is common? Without any doubt, the poor reading culture in our country is a big challenge to the publishing industry. Books rank very low on the preference list of an average Nigerian and this has made it difficult to achieve turnover that is commensurate with our huge population. Some parents would rather spend money on electrical appliances, jewelry,clothes and frivolous ceremonies than buy recommended books for their children, It is so bad, but for the intervention of the government, even textbook purchase for core subjects like Mathematics, English Language and the Sciences, may suffer. It ÂĄs easy to look at the level of poverty and say there is no purchasing power. The irony however is that education can provide opportunities that can lift people out of abject poverty and neglect. As a matter of fact, many of the successful professionals and public figures in the country today came from humble backgrounds. They were able to rise above the circumstances of their births through the acquisition of excellent education, perseverance, self-discipline and strong faith in God. Besides, the cost of funds is still very high and this is a serious headache for many companies in Nigeria. As a matter of fact, some of them

Mr. Segun Oladipo, MD/CEO, Learn Africa Plc

Considering the critical importance of our sector to national development, government can offer us incentives like tax holidays, duty free mportation of printing machines

are unable to pay dividends to shareholders because the greater percentage of what they would have declared a profits is used to pay interest on credit facilities that they obtained from the commercial banks. Perhaps, the Governor of the Central Bank will initiate policies that can address this concern and encourage the private sector to increase capacity utilization and establish new factories that can reduce the current high level of unemployment. In what ways should government assist the book publishing

industry? Government needs to address the c h a l l e n g e s associated with our p u b l i c infrastructure. Our road networks need to be expanded and m a i n t a i n e d regularly to enable c o m p a n i e s distribute products across the country at a lower cost and at a faster pace. It is hoped that the reforms in the power sector will bring about the desired improvement in the provision of electricity and reduce our dependence on industrial diesel generators and the a t t e n d a n t environmental

pollution. Considering the critical importance of our sector to national development, government can offer us incentives like tax holidays, duty free mportation of printing machines, books, paper, ink and other materials that we use inthe industry. We would like government to intensify anti-piracy campaigns in order to reduce its negative impact on the fortunes of the industry. As the CEO of Learn

Africa Plc, what is the performance of the company in the face of all the challenges? Despite the tough business climate, we have been able to meet our obligations to the employees, suppliers, authors, shareholders, government and other stakeholders. Besides, we have made remarkable progress in our attempts to take the company to greater heights despite the challenges. It is also inspiring to know that we are making significant contributions to the human capital development of our country through our learning resources that are enjoying warm reception among students, teachers and booksellers. I hasten to add that we have been able to forge ahead due to the unflinching support ofour shareholders, our solid capital base, the resourcefulness of our employees, the high quality management team and the visionary Board. Since the exit of Pearson Education from Longman Nigeria, the stock price of Learn Africa Plc on the floor of the Nigerian Stock Exchange has been dropping. What is responsible for this? The decline in our share price was largely due to wrong perception by some market operators who thought we might not be able to cope with the challenges that were likely to be associated with the divestment of our former parent company. Besides, we incurred significant costs as a result of several initiatives to expand our product portfolio, distribution network and field operations which had some impact on our profitability. However, I am pleased to report that we have started enjoying the benefits of those decisions, which were taken to ensure the continuous growth and prosperity of our company. It may interest you to note that we have successfully introduced new titles into the Nigerian market as replacements for some of the Pearson Education titles that were withdrawn from our list. What is your message to the shareholders and prospective investors? I will like to express my sincere appreciation to the shareholders whose supports havebeen very critical to the remarkable achievements that we have recorded in the recentyears. We are strongly committed to the establishment of our titles on the key subjectsas leaders in the pre-primary, basic and senior secondary segments of our market.

Vanguard, MONDAY, MAY 18, 2015 — 31

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32 — Vanguard, MONDAY, MAY 18, 2015

Interview By PETER EGWUATU

r. Albert Okumagba was until recently the President of Chartered Institute of Stockbrokers, CIS before he stepped down as the President of the institute following the Securities and Exchange Commission, SEC ongoing regulatory oversight investigation on BGL Plc’s activity where he was the Group’s Chief Executive Officer. Prior to joining the company, he was Manager and Head of Mergers and Acquisitions at Centre-Point Merchant Bank Limited (now Unity Bank Plc). During his career at Centre-Point, Mr. Okumagba managed portfolios in Corporate Banking, Multilateral Agency Credits and traded on the floors of the Nigerian Stock Exchange on behalf of Centre-Point’s stock broking affiliate. In this interview, he spoke on a number of issues affecting capital market activities and the economy in general and the way forward

Excerpts:

What would you consider as the major challenges facing the Nigerian capital market at the moment? Crisis of confidence is still pervasive in the market especially, among local investors. The negative impact of the margin loans era cannot be forgotten so easily. This is why you have more speculators than long-term investors, accounting for the high volatility and instability in the market. Currently, the macro economy, with dwindling oil prices, devaluation of the Naira, exchange rate instability is not helping matters. Lastly, the sociopolitical situation with insurgency in the North constitute additional uncertainties; thereby accentuating the risk of investing in the Nigeria capital market. What is the way forward? We can do a number of things. First, keep on creating an enabling environment to make the investors, both local and foreign, regain confidence in the market. We need to encourage rules that will deepen the market especially in areas of capturing major sectors of the economy that are not currently wellrepresented in the capital market, for instance Telecommunication, Power, Entertainment and Oil and Gas. We need to also deploy the existing huge savings in pension funds to develop the economy and the capital market through investment in infrastructure. Since you took up the mantle of leadership of the Chartered Institute of Stockbrokers (CIS) in April 2014, you have been consistent in your call on operators and regulators in the capital market to work very closely with the government. Is you call being heeded? Well, the process is on-going. Nothing good comes easy. The importance of the government in the economy of a developing nation like ours cannot be overemphasised in the area of directing the economy, formulating, implementing and enforcing policies. As an institute, we C M Y K

have reinforced and reinvigorated various advocacy platforms available to us to engage government in various areas for the good of the country and the capital market; for example, through our Annual National Workshop, and the capital market alliance consisting of CIS, ASHON and AIHN. And I can assure you, we are making progress. You have also become a strong advocate of professional associations coming together for a cohesive goal. Does this inform the recent signing of a five - year economic development pact by the CIS, Institute of Chartered Accountant of Nigeria ICAN and Nigeria Bar Association , NBA in Lagos recently? Yes it does. We believe there is need for collaboration and exchange of ideas among professionals on subjects of common interest, in addition, to making and/or supporting representation to government and other appropriate agencies of government on matters affecting the parties and the Nigerian economy. What is the overriding philosophy of this agreement? We are collaborating to become a stronger force to further the mutual interests of the parties, and the development of the Nigerian socioeconomic life. Recall the famous one-Day Dialogue on the Capital Market and 2015 National Budget. What were the critical underlying actors that

Albert Okumagba... In a situation of uncertainty such as we are now, the level of risk

We need to encourage rules that will deepen the market especially in areas of capturing major sectors of the economy that are not currently well-represented in the capital market enhanced its success? The underlying factor is the reinvigorated synergy between CIS, Association of Stock Broking Houses of Nigeria, ASHON and Association of Issuing Houses of Nigeria, AIHN in promoting our common interest, and the relevance of the discussion, bearing on the growth and development of the Nigerian Capital Market within the context of the national budget for 2015. In addition, the invitation of well-experienced speakers with pedigree both from the public and private sectors also enhanced the quality of the discussions.

Any plan to widen the scope of the one-day dialogue and make it an annual event? Our plan is to make the dialogue an annual event. The forum is designed to engage government on the national budget and other issues in the economy and to position capital market operators for the opportunities and challenges ahead. Most importantly, through the collaboration of CIS, ASHON and AIHN, the capital market will be able to speak with one voice. The Central Bank of Nigeria (CBN) has again taken some strategic decisions on the devaluation of the Naira. How does this benefit the capital market? Let’s start by considering the impact on the economy as a whole; devaluation can have both positive and negative effects. On the one hand, it would encourage local industries which can now earn more naira on their exports with positive impact on our trade balances. On the other hand, it will bring about closure of many companies that depend mainly on imported raw materials as the cost of their inputs will increase significantly upon conversion to their naira equivalent. For Nigeria which is largely import dependent, the overall impact will likely be negative in the short run. This could result in negative macroeconomic indices such as higher rate of unemployment, lower GDP and lower industry capacity utilisation. This could immediately lead to a reduction in the profits of some listed

companies thereby reducing the potential for capital appreciation and dividend return, hence hurting the capital market. On the long run however, it is could be a positive development for the economy as manufacturers opts for local substitutes to imported raw materials and the country’s exports become competitive. Corporate earnings become more stable (as they are no longer significantly exposed to foreign exchange volatility) to the benefit of the capital market. What would you advise investors at this period of uncertainties in the polity? In a situation of uncertainty such as we are now, the level of risk is higher; hence investors should be cautious. In every crisis, there are both chaos and opportunities. To tap these opportunities, investors with little or no experience

On the long run however, it could be a positive development for the economy as manufacturers opt for local substitutes to imported raw materials and the country’s exports become competitive

Vanguard, MONDAY, MAY 18, 2015 — 33

Interview

Crisis of confidence still pervasive in stock market —OKUMAGBA AlbertOkumagba

is higher; hence investors should be cautious should always engage the services of experts to manage their wealth. This should provide them with the benefit of professional advice. I will specifically advise small investors to invest in well-managed funds at this time. The fund managers have the

Albert Okumagba

experience to manage portfolios of well-diversified assets for reasonable returns at relatively lower levels of risk. Finally, this time also presents investors opportunities to generate abnormal returns because Nigerian equities are significantly undervalued, as the common saying in finance goes, ‘the higher the risk, the higher the returns.’ Your administration is determined to grow the membership base and raise the income profile of the CIS. Can you relate this to the efforts being made by the institute to leverage on the Diploma Programme in Securities and Investment? At the CIS, we have been engaged in aggressive mobilisation efforts in the last couple of months. We have signed-on five firms to assist in the strategic growth of our student membership base. These firms have been provided with the necessary training and tools in order to achieve our target of mobilising one million students for our professional Diploma examination. Aside from this, we regularly visit

tertiary institutions and NYSC camps for career talks and enlightenment on the benefits of the CIS certifications. We are working with top stock broking firms presently to provide employment opportunities for graduates of the CIS Diploma programme. You have always been focused on the need to move the CIS to the next level. What should be put in place to achieve these laudable goals? Our goal is to be a leading professional institute in Nigeria in the next few years. This requires the commitment

of all our stakeholders. We need the buy-in of all CIS members, so that they can contribute their own quotas. We are engaging the support of all. We need to strengthen our structures especially the Institute’s secretariat to be able to deliver on expectations. The SEC, all the trading platforms, and Securities and Investment firms also have roles to play in supporting this goal which will be to the benefit of the capital market as a whole. The CIS is believed to have become more visible under

The conference on the creative industry was an eye opener to the stakeholders in the industry as they were able to appreciate the enormous potential for long-term financing of this major sector through the Nigerian Capital market

y o u r administration. What is the strategy? We have taken bold steps to put the institute back to its rightful place. We are impacting on all our stakeholders in various ways. Beyond the capital market, we are regularly contributing our quota to national discourse and engaging the government on relevant issues. We have also taken deliberate

steps to inform members and the public about the institute and its activities. During the 2014 Annual Conference of the CIS, the focus was on the entertainment industry. Any update? The Conference on the creative industry was an eye opener to the stakeholders in the industry as they were able to appreciate the enormous potential for long-term financing of this major sector through the Nigerian Capital market. There are ongoing discussions between capital market operators and practitioners in the creative industry on the modalities for exploiting the opportunities available in the market to further develop “Nollywood”. What message would like to pass to the investing public? Uncertain economic times can bring you down along with the market. But even when the stock market turns down, it is possible to make money. Bear markets are great times to buy stocks at bargain prices. I would advise small investors to focus on well-chosen mutual funds or exchange-traded funds (ETFs). This provides the benefit of risk reduction and professional management.

34 —Vanguard, MONDAY, MAY 18, 2015

Homes & Housing BY YINKA KOLAWOLE

takeholders in the housing sector have called on the Federal Government to redeem its guarantee on the Series 3 of the N100 billion mortgagebacked bond it floated in 2007. The Series 3 is maturing on May 24, 2015 with obligation to pay N24.564 billion to Note holders. They said failure by the Federal Government to redeem the bond at maturity will lead to the call of FGN Guarantee that backed the transaction which can spell doom for the country in local and offshore financial circles. It would be recalled that the President Olusegun Obasanjo administration, in 2007, floated a N100 billion mortgage-backed bond to raise funds to assist civil servants to buy federal government houses under the regime’s monetization programme. The 1st Series of the Bond was issued on May 25, 2007 for the sum of N26 billion with maturity date of May 25, 2012, while the 2nd Series was issued on April 3, 2012 for the sum of N6 billion with maturity date of April 3, 2017. At the maturity date of the first Series on May 25, 2012, it was refinanced and became Series 3 Bond with maturity date of May 25, 2015, with obligation to pay N24.564 billion to Note holders. The Federal Government was the Guarantor and Initiator of the bond. In order to make the transaction independent of FMBN, the government ensured that it was carried out through Special Purpose Vehicles (SPVs) incorporated with the Corporate Affairs Commission (CAC), namely: FMBN SPV Issuer Limited, FMBN SPV Funding Limited, and FMBN Mortgage Trustee Limited. Parties to the bond programme include: UBA Capital, Lead Arranger/ Adviser for Series 1 Bond, UBA Capital Trustees, Notes Trustees, FBN Trustees Limited, Security Trustee, G. Elias & Co; Transactions Counsel, Dunn Loren Merrifield Ltd, GIC Provider, Bond Series 2 & 3, ASO Savings & Loans Plc, Mortgage Loan Originator/ Servicer and Stanbic IBTC Bank Plc that was the Account Bank for Series 2. However, financing the bond has been facing several challenges including: Negative carry (interest rate subsidy) arising from Government fixing the mortgage interest rate at 9.5 percent which is lower than market rates. The Federal Capital Territor y Administration (FCTA) was to offset the subsidy payments on an annual basis; however FCTA paid the subsidy for only one year throughout the tenors of the bonds. Tenor mismatch arising from

N100bn mortgage-backed bond: FG urged to redeem guarantee

FMBN MD, Kimba Ya'u Kumo mortgage tenors of 15 years while the bonds are for five and three years respectively; Nonperforming loans (N3.64 billion) arising from default on mortgage repayments which mortgage loan originators (MLOs) have responsibility to recover and; Non-remittance of collections by the MLOs, such as ASO Savings & Loans Plc which was said to have failed to remit about N4.54 billion to FMBN. The apparent unavailability of funds to redeem the bond has led to buck-passing between FMBN, Debt Management Office (DMO) and Federal Ministry of Finance on which of them is to provide the funds. This development prompted the Coordinating Minister of the Economy and Minister of Finance, Ngozi Okonjo Iweala to issue a directive, mandating the FMBN to accept responsibility for the bond. A reliable source said in the directive conveyed through a letter dated 5th May 2015, addressed to Mrs. Akon Eyakenyi, Minister of Lands and Housing, OkonjoIweala recommended that assets of FMBN be sold to offset the sum of N24.564 billion, being the first tranche of the bond, which matures on 24th May 2015. According to the source, the letter reads in part; “I wish to recommend that Mr. President considers directing the Honourable Minister of Lands, Housing and Urban Development to direct the FMBN to raise funds to pay its maturing obligation of N24.564 billion on May 24, 2015, as it must

Finance Minister, Ngozi Okonjo-Iweala

Government should be thinking of beefing up the capital base of FMBN rather than asking the bank to sell off its assets

forestall imposing a crisis on the economy. FMBN should ensure that ASO Savings and Loans immediately remit the collections of N4.54 billion which it has failed to remit to the FMBN. FMBN to immediately recover all the non-performing loans, including the use of Foreclosures (where the C of O of the properties are in the custody of the security trustees) of the assets of the defaulters, and take all necessary actions to ensure that the federal government guarantee does not crystallize.” Stakeholders have described current events surrounding the bonds as unfortunate saying that the country has serious obligation under the bond transactions which if not met can undermine the country internally and externally. In his reaction, President of Real Estate Developers Association of Nigeria

(REDAN), Rev. Ugo Chime, passing the buck to FMBN at this stage will not augur well for the country. He counseled that government should rather inject more funds into the FMBN and even restructure it if deemed fit for better efficiency. His words: “On this bond issue, we need to look at some aspects. Where is the money? Was it injected into the NHF? This money should have been used as seed fund to assist FMBN to make houses more affordable. I don’t think that at a time when the government should be thinking of beefing up the capital base of FMBN it should be asking the bank to sell off its assets. The Federal Government should pay the money that is due in a few days as this date has not come to them as a surprise. There are no assets for the FMBN to sell off to be able to meet the deadline, even if there were how many days will it take to do so and meet up with the deadline?” Chime said the government

has used privatization to remove safety nets from the common man and describes the bond controversy as another attempt to further make the common man suffer. He added: “People are contributing 2.5 per cent to the National Housing Fund and over 90 per cent of these people cannot access the NHF loans due to poor funding by the same government. Government should live up to its responsibility as far as this bond issue is concerned”. Also speaking on the development, Chief Executive Officer of a mortgage bank, who spoke on condition of anonymity, said: “The Federal Government can redeem the Guarantee to meet the matured obligation and subsequently recoup from the unremitted collection by ASO Savings totaling about N4.54 billion. Then it has to look at the non-performing loans of about N3.64 billion and outstanding mortgages to redeem its obligation under the Series that will soon fall due.” Meanwhile, FMBN argued that since it neither sponsored nor guaranteed the transaction, it should not be held responsible or liable for the bond. Managing Director of FMBN, Gimba Ya’u Kumo, in a letter addressed to the DMO, explained that the bond issuance programme was at the instance of the federal government. He added that the guarantee that supported the bond transaction was between the federal government as the guarantor and UBA Trustees Limited as the Notes Trustees.

US mortgage rates up for 3rd week

verage long-term U.S. mortgage rates are up for the third straight week. Mortgage giant, Freddie Mac says the average rate on a 30year fixed-rate mortgage rose to 3.85 percent from 3.80 percent a week earlier. The rate on 15-year fixed-rate mortgages rose to 3.07 percent from 3.02 percent. Both rates were the highest since mid-March. Still, mortgage rates remain low by historic standards. A

year ago, the 30-year rate was 4.20 percent and the 15-year was 3.29 percent. Long-term mortgage rates are rising along with the yield on 10-year Treasury notes, which is up to 2.24 percent from less than 1.9 percent in mid-April. The higher rates reflect some signs of improvement in the U.S. economy. The unemployment rate tumbled last month to 5.4 percent, lowest since May 2008.

C M Y K

Vanguard, MONDAY, MAY 18, 2015 — 35

Micro-Finance Stories by PROVIDENCE OBUH with agency report

oor orientation is r e s t r a i n i n g disbursement of the N220 billion Micro,Small and Medium Enterprises Development Fund (MSMEDF) Lagos State Coordinator, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) Mr Yinka Fisher, disclosed this, while stating that the Central Bank of Nigeria (CBN) and Micro finance Banks have stopped the disbursement of the loans

Poor orientation hampers MSMEDF disbursement — SMEDAN following logistics impediments. Fisher said that the embargo was placed on the disbursement of the fund due to lack of collateral from the Small and Medium Enterprises (SMEs). According to him, “The truth is that the disbursement of the fund has been placed on hold for now because most of the SMEs do not have presentable collateral and certificates of incorporation. “The microfinance banks

are complaining that they already have collateral with the Central Bank, but the SMEs approaching them for the loans are coming with un-

presentable collateral, so with this, it is difficult for the microfinance banks to keep giving out the loans. “We are currently on

reconciling terms with the CBN to figure out other means, but another major issue is that some of the SME owners are getting poor orientation about the loans,” he said.

Accenture partners LCCI to empower 3m youths by 2020

ccenture has entered into partnership with Lagos Chamber of Commerce and Industry, LCCI, in order

to give a six months mentoring programme to young Nigerian entrepreneurs, as part of efforts to realize its vision 2020 to empower three million people globally to become successful entrepreneurs and business owners. Speaking at 2015 LCCI mentoring program in Lagos, M a r k e t i n g Communications Leader, Accenture Nigeria, Mr. Segun Olalandu, said Accenture started with a vision to empower 250,000 people globally and have thus achieved the number.

“Accenture now aims to empower three million people by 2020 globally by helping them get a job or start a business. As at 2015, Accenture has empowered over 800 thousand people globally and now it is enabling 50 people and helping them grow their businesses through the partnership. “We partner significantly with anybody who will help us achieve that goal of getting people employed, skill them up to be employable and also people who will help us get people to start their own businesses like LCCI is doing,” he said. President, LCCI, Mr. Remi Bello, said that the focus of the developmental initiative on the youth is a means of investing in their future and guaranteeing a better tomorrow for the country.

Aregbesola lauds Airtel on job creation

sun State Governor, Ogbeni Rauf Aregbesola, has commended leading telecommunications services provider, Airtel Nigeria, for its support to local content development, saying the telco is helping to power the State’s job creation drive. Speaking at the RLG Product Discovery Day held at RLG Adulawo Technology City, Ilesa, he said that the telecommunications company has shown support for local content development, establishing retail footprints across the country and boosting job creation. “Airtel has supported a significant breakthrough for the Adulawo Technology City, supporting the provision of jobs from end-to-end, from the technicians in the Adulawo Technology City to those working in the Airtel retail pipeline,” he said. Describing the Technology City initiative as a historic monument Aregbesola explained that the tech city in the last one year had provided direct employment to 150 indigenes and was poised to provide employment to 1,500 sales persons, who would man kiosks and other sales outposts for RLG products. Also speaking, Managing Director/CEO, Airtel Nigeria, Mr. Segun Ogunsanya, said that the company believes in supporting local development, providing opportunities for job creation. According to him, Airtel has invested enormously in building a large eco-system for local content initiatives through its broad-based programmes and initiatives. “Interestingly, the youths are the biggest beneficiaries of our local content initiatives. Only recently, we floated an initiative, Catapult-a-Startup, with the overriding idea of providing youths with a strong platform, robust funding and right partnerships to build local applications that will help transform lives, shape public service and build a better society for all of us. The good news is that we have seen a lot of success stories come out from this programme,” he said.

36 — Vanguard, MONDAY, MAY 18, 2015

Banking crisis and another season of anxieties “If the opinion of insiders is anything to go by, it may be correct to say that the nation’s banking community is in dire financial straits. That much the NATION can authoritatively report.” NATION ON SUNDAY, April 12, 2015, p 58. oreigners know before we do when a banking crisis is round the corner. Two usual tell-tale signs occur in rapid succession. First, Foreign Portfolio Investment, FPI, drops. Second, some banks start approaching the capital market for funds to shore up their balance sheets. The two are happening now and, once more, it is time to be careful where depositors place their money. Nobody needs a repetition of Societe General and Savannah banks which closed their gates trapping billions of peoples’ money till today. The question is why so soon again? Also, what happened to Soludo’s assurances to Nigerians, after “ConSOLUDO-tion that depositors could go to sleep with their two eyes closed. Once again, those in the know are experiencing sleepless

nights. This will be the third crisis since the emergence of twenty five banks as Megabanks in 2006. Most Nigerians would recollect that Professor Chukwumah Soludo, the former Governor of the Central Bank of Nigeria, CBN, had boasted that he was bequeathing to the nation, banks in which depositors can keep their funds and “go to sleep with their eyes closed.” Among those banks, Soludo left us with were Intercontinental, Afribank and Oceanic – all now of blessed memory. In 2006, the nation was left with 25 “strong” banks out of seventhree the previous year. Today, there are less than fifteen and the next banking crisis might reduce the number to under a dozen. The reasons, not far fetched, are linked. First, when Foreign Portfolio Investment, FPI, starts dropping significantly, certain things occur. The departing foreigners depress the capital market and their pessimism about the future becomes contagious. Even domestic fund managers

begin to consider exiting the market. That is already occurring. In an article in the SUN, on May 11, 2015, page 43, by Chinenye Amiforo, it was revealed that FPI in March of this year, had declined from N133.92bn to N102.56bn. And, we are still in the first quarter of the year –a year, which promises more harsh news than any we had experienced in years. That will be explained later. Simultaneously, several banks are forced, voluntarily or otherwise, to approach the capital market for funds to shore up their balance sheets. Once again, that process is on. At least four banks are already in the market to raise fresh capital; the number will certainly go up in the near future. Banks going to the capital market under the cloudy economic outlook of the nation must have more faith than that required to move mountains to expect the result to be favourable. But, the banks have no choice. They are stuck between the devil and the deep ocean. That is not an ideal operating environment. Banks should

operate in calm waters. The devil was the price of crude, which dropped suddenly; the deep ocean is the out-going Federal government whose economic managers were most irresponsible. GDP growth declines by 2.08% in Q1—NBS. PUNCH, May 14, 2015, p 7. However, the real demon threatening the banking sector is the Nigerian economy at the moment and the trend for the near term. The PUNCH story, went on to say that “The National Bureau of Statistics, on Wednesday night released the first quarter 2015 Gross Domestic Product figure, stating that the country’s GDP declined from 5.94 per cent at the end of the fourth quarter of last year to 3.86 per cent.” That revelation by the NBS has further complicated the problems of Nigeria banks – irrespective of whether they need additional capital or not. High GDP growth rate, averaging over 7% per annum, in the last six years had been the magnet for attracting Foreign Direct Investment into Nigeria. Hitherto, it had been one of

the top five globally and investors had ignored the risks associated, or perceived to be, with investment in emerging markets. Decline to 3.86 per cent is a definite turnoff. So, those dollars walking into Nigerian banks will walk away for a while. Crude oil is the devil here. High crude oil prices, like high tide, brought them in. Low crude oil is washing them away. “Against the stupidity [of rulers], the gods themselves struggle in vain.” Schiller, 1759- 1805. (VANGUARD BOOK OF QUOTATIONS p235. Fate, as well as the infinite deafness of Federal government officials, Jonathan’s Campaign Managers, and jesters like the Transformation Ambassadors had combined to close the President’s eyes to the impending doom. Repeatedly, they had pointed to the exceptional GDP growth in the past. Nobody, not even Okonjo-Iweala, mentioned the, now inevitable, possibility that Jonathan might leave office at a time when the economy is crawling at 3%. And with that he had sealed the fates of at least three banks. It is not much of a legacy to inherit an economy growing at 7% and leave it at 3%; is it?

Business & Economy

he most senior managers at oil giant Eni appear to have misled shareholders over the company ’s actions in a corrupt oil deal at its 2014 AGM. This is very important – as they gather for the 2015 meeting, shareholders in Italy ’s biggest company should expect straight answers over a deal which poses real risks to their investments. The corruption at the heart of the deal deprived the Nigerian state of over U.S. $1.1 billion, has triggered investigations by authorities in three countries, and could ultimately lead to the Eni and its partner Shell losing access to the oil block. The back story goes like this: in 2011 Eni and Shell paid $1.1bn for oil block OPL 245, one of the biggest off the coast of Nigeria. The money should have ended up in Nigerian state coffers, where it is badly needed - $1.1bn is equivalent to two-thirds of the 2014 Nigerian healthcare budget. Instead the payment was made to the government, who then passed on to Malabu, a front company owned by the former Nigerian oil minister, Dan Etete Etete had awarded C M Y K

Eni misled shareholders over Nigeria corruption scandal — Global Witness his own company the block whilst in office under the former dictator Sani Abacha, and was now, together with others was cashing in on his corrupt acquisition. Eni’s senior leadership claimed it didn’t know that Etete was behind Malabu at its 2014 AGM. But due diligence reports commissioned by Eni seen by Global Witness show that that Eni was told “Whatever the formal ownership structure of Malabu, all of the sources to whom we have spoken are united in the opinion that Dan Etete is the owner of the company”. The company did later adjust its story saying that they never completed their full due diligence process because they changed their mind about doing a deal directly with Malabu, doing the deal via the Government instead, and that Etete’s involvement was

a ‘red flag’ and an ‘element of concern. However, it is difficult to understand how Eni’s staff could honestly conclude that its due diligence had not found clear

evidence for concluding that Etete was ultimately behind Malabu. This kind of deal poses huge risks for Eni’s investors. The case has been

investigated by authorities in three separate countries and its former and current CEOs are both under investigation for their role in the deal.

GTBank launches mobile money transfer

uaranty Trust Bank plc has launched another innovative mobile channel which enables GTBank customers conveniently perform third party transfers to both GTBank and other bank account holders in Nigeria, via their mobile phones, by simply dialing the USSD short code *737 with details of the amount and account number (NUBAN) of the beneficiary. The *737* transfer service is another novel offering pioneered by GTBank in the Nigerian Financial Industry, that is safe, simple and convenient. The 737 transfer

service has been introduced to build on the success of the Bank’s One Click Top –up service; which offers GTBank customers an efficient and easy way to buy airtime on their mobile phones directly from their GTBank account by simply dialing a short USSD code (*737*AMOUNT#). According to Mr. Segun Agbaje, Managing Director/ CEO of the Bank, “we will continue to leverage technology to make banking, especially payments and transfers, faster, safer and more convenient for all our customers. He further stated that, “this service addresses

the electronic banking requirements of our customers, irrespective of their phone type”. The *737* Transfer service is only available to GTBank customers via their mobile phone numbers registered with the Bank and has minimum transfer limit of N1,000 and a daily transfer limit of N20,000. Guaranty Trust Bank plc was established in 1990 and has within the last 25 years come to be recognized as one of the most profitable, innovative, service focused and well managed banks in the Nigerian financial market space.

Vanguard, MONDAY, MAY 18, 2015 — 37

Tax Matters

Distinguishing withholding tax from value added tax

other third parties are subject to WHT. The stockbroker is to pay over tax withheld from the commission and other fees to the relevant tax authority.

here is a need to draw attention to the fundamental difference between Withholding Tax (WHT) and Value Added Tax (VAT) so as to facilitate clear understanding of the mechanics of the tax concepts. WHT is an advance payment of income tax and the purpose is to bring the prospective taxpayer into the taxnet, thereby widening the income tax base. In other words, the WHT system is aimed at tracking down taxpayers and the incomes which may otherwise not be reported by them. When the income on which WHT is deducted at source is finally brought to the notice of the tax authority and the appropriate tax computed, due credit is given for the WHT deducted at source on the presentation of the original WHT receipts through the issuance of credit notes. The taxpayer will be required to pay only the balance due after matching the actual tax liability against the credit for the WHT suffered at source. WHT is therefore nothing more than a collection machinery to curb tax evasion. It is not a separate tax on its own. It is a part of the income tax whether personal or corporate income tax. In contrast, VAT is a different type of tax. VAT is a consumption tax payable on the goods and services consumed by any person, whether government agencies, business organisations or individuals. The target of VAT is the final consumer of goods and services and unless an item is specifically exempted by law, the consumer is liable to the tax. Exemption from this is not aimed at agencies, companies or individuals but rather at the goods and services. Therefore, all agencies of government, religious and other organisations and similar persons that are normally exempted from income tax are expected to pay VAT on the goods and services consumed by them except where the goods and services are specifically exempted by law. THE PRIMARY MARKET (a)

How to Impose WHT

It is usual for issuing companies to pay fees to issuing houses, stock brokerage firms, reporting accountants and solicitors in respect of new and rights issues, as well as debenture stocks. Such fees should be subject to withholding tax at source in accordance with Section 63 of the Companies Income Tax Cap 60 LFN 1990, and the relevant extra-ordinary Gazette. The issuing companies are hereby mandated to deduct the WHT tax there-from and pay over to the Federal Inland Revenue Service (FIRS) within 30 days as stipulated in the tax law. The net is then paid over to the issuing house that handled the issue. The applicable rate for C M Y K

(b) How to Impose VAT In both purchase and sale transactions, the consumer of the services rendered is the investor. It is therefore the investor that is subject to this tax. The VAT on these transactions should be paid over to FIRS.

commissions/fees is ten percent (10%) for limited liability companies, and five percent (5%) for individuals and partnerships. (b) How to Impose VAT Ever y consumer pays VAT on services rendered to it. As consumers of the services rendered by both the issuing houses and other parties to the issue, the issuing companies are liable to the payment of VAT for the services rendered. The issuing houses and other parties to the issue should charge VAT at 5% on their invoices for services rendered. Since the issuing houses handle the transactions connected with new and rights issues, they are to act as agents for the collection and remission of VAT to FIRS. (c) Listing by the Nigeria Stock Exchange (NSE)

Before an operator’s licence is renewed by a regulatory authority, evidence of WHT and VAT on issues handled in the previous year must be produced.

As a pre-requisite for listing new securities by the NSE, the evidence of settlement of WHT and VAT on the new and rights issues must be attached. The listing fees are themselves liable to WHT and VAT. (d) Renewal of Operators’ Licences Before an operator ’s licence is renewed by a regulatory authority, evidence of WHT and VAT on issues handled in the previous year must be produced. THE SECONDARY MARKET (a) How to Impose WHT · In the case of a purchase, the stockbroker is expected to charge the investor for the following:o The cost of the shares purchased, o Commission based on gross value of shares purchased on behalf of that investor, - the Securities and Exchange Commission (SEC) fee (which is currently 1% of total consideration and is not subject to WHT and VAT being part of gross income earned by SEC) o Deduct WHT on the commission at 10% and pay over to the relevant tax authority, i.e. State Board of Internal Revenue (SBIR) or FIRS. · In the case of a sale, the stockbroker is expected to deduct from the investor’s gross consideration the following:o his commission, o the other fees payable to other third parties, as approved by the SEC. · Thereafter, the net sale should be paid over to the investor. · Both the Nstockbroker ’s commission and other fees paid to

COLLECTION ARRANGEMENT In respect of the collection of the taxes herewith discussed, the usual collection arrangement will prevail. Reference to the relevant FIRS information circular (9502 of 20th February 1995, 9501 of 13th January 1995) may be advisable. However, in summary, the following collection arrangement should be observed:(a) WHT Ø The rate at which tax is to be withheld on commission and fees is 10% when these payments are made to limited liability companies; and 5% for individuals and partnerships. Ø The currency in which the tax is to be paid is the currency the transaction was carried out and in which the tax was deducted. Ø payments of wht should be made in bank drafts and payable to: Ø ‘‘The Federal Government of Nigeria- FIRS – Withholding Tax Account’’ Ø Payments should be accompanied by the relevant forms (CMF1, CMF2, CMF3, CMF4, or CMF5). Ø Any default in the implementation of the tax carries heavy penalties. Ø Failure to deduct WHT and failure to remit taxes withheld are punishable on conviction by a fine of 200% of the tax not withheld or remitted. (b) VAT Ø The rate for VAT is 5%. Ø Payments of VAT should be made in bank draft and payable to: Ø ‘‘The Federal Government of Nigeria – FIRS – VAT Account’’ Ø The payments should be accompanied by the VAT FORM 022 which is readily available online and all FIRS offices throughout Nigeria. DUAL ROLE OF ISSUING HOUSES It is necessary to clarify that the new policy of government imposes dual roles on the issuing houses as agencies which handle new and rights issues: ibas agent of government for the deduction and remittance of WHT and as agent of government for the collection and remittance of VAT even in respect of their own respective transactions which ordinarily should have been paid over to the operator who charged the VAT on his invoice. (For more details see pare. 4 of Information Circular no. 9502 of 29th February, 1995).

38 — Vanguard, MONDAY, MAY 18, 2015

People in Business BY EBELE ORAKPO

rs Bunmi Aremo, a graduate of Home Economics from the University of Agriculture, Makurdi, is the Managing Director/ Chief Executive Officer of Lagos-based Precious Cookies. In this chat with Financial Vanguard in her office, she spoke on her business, how she got into the confectionery business, the challenges and why she ended up studying Home Economics. Excerpts: Studying Home Economics: According to Aremo, as a child, she loved working with her hands and very creative so she thought of reading Agric Economics but was given Home Economics instead. “My mother asked me to come home because reading Home Economics, to her, was like wasting my talent. I also got admission into Obafemi Awolowo University (OAU) to read Agric-Economics. I had done remedial programme in Makurdi so I told one of my lecturers that I was leaving for OAU and he asked why I felt Home Economics was not good for me. I said it’s all about cooking. He explained to me that it is not about cooking, that it is in the Faculty of Engineering, College of Food Science and Technology and that the programme was new so I decided to stay and throughout the course, there was no cooking. I learnt how to calculate nutrients in food and so many other things. In fact, my project (which involved calculating the amount of nutrients in the food of about 200 pupils), half of it was slashed because my external supervisor could not believe I did the work as according to him, it was a PhD stuff and not relevant for a BSc. programme.” Going into business: “I got married and was teaching at the NigerianTurkish International School, Abuja. I was pregnant and two weeks before the birth, I was involved in the Miss World riots in Abuja and it affected me. We tried to manage the pregnancy to seven months so that the child can survive but we couldn’t, so I had a premature baby. He was born at six and half months and so small that after wrapping him in layers of cloths, he did not still weigh up to one kilogram at birth. "So the doctor advised me to forget about work and devote time to him. My son was born

on the 8th but we celebrate his birthday on the 9th, we had to give him a whole day after he was born to be sure he would survive. "I am not the type that can sit at home doing nothing so one day, a friend came to me and asked me to teach her how to make cake. I said “cake? When we were in school, did you ever see me with spoons and pots? I don’t know how to make cake.” I asked myself how I could tell people that I read Home Economics and yet cannot make cake. So I told her to come and teach me after she learnt and she did."

Challenges are part of life; they help us to grow — BUNMI AREMO

Coming to Lagos: "I started making cakes and my husband would help me distribute. I was doing that until my he was transferred to Lagos. When we came to Lagos, I started training again on cake-making and I got a bigger market this time. I was supplying companies’ staff birthday cakes. I started with Queens cake which I was supplying to supermarkets. My husband started complaining, saying there was not enough space in the house for my business so I should move out. Prior to that, a friend told me about Pan-African University’s Lagos Business School. I applied for and got scholarship. In class, they told us it is unwise to do your

Finance is another challenge but I believe that if you have an idea, people will come to your aid; it is not about money business from home. Though they are not despising the day of little beginning, but if you don’t move out, you will remain small. I got to know about Technology Incubation Centre (TIC) Lagos and with the help of the Enterprise Development Centre, PanAtlantic University, I was given a space. I couldn’t believe it because in less than two years, I got my NAFDAC certification, I not only do the Queens cake, I began to do cookies and I noticed that the cookies were selling more." Moving forward: “Before I get to some

*Mrs. Bunmi Aremo...a certain amount of their salary must go towards their education supermarkets, I would see queues and one day, I was told they were queuing for the cookies, that I was not bringing enough, so I had to double the supply. At this time, the cookies were unlabelled. One of my staff suggested we begin supplying in cartons. We did and increased the number of outlets. International market: "Before I knew it, I was exporting the cookies. My entrepreneurship training with EDC really helped me. The packaging when I came from Abuja was really ugly so I changed to another one which was still ugly but by the time I

finished my training, everything changed, even my dressing. So entering the international market was not too difficult for me because of the background. Now, we are trying to move into the Asian and American markets. Business has been improving day by day, especially with the help of the TIC. We are trying to work on some other lines, still on cookies; cookies is about shapes and flavours." The staff: "Presently, we have nine members of staff due to space and capacity. We just acquired

an electric oven. We were using manual oven before which would bake a tray for three hours but the electric oven does it in 30 minutes. We can still calibrate it to bake a tray in 10 minutes. With that, we believe we can have more turnover. It will increase our salary and we will be able to employ more people. Most of my staff are unskilled. What I do is to work with them and then work on their minds to go back to school. There is a certain amount of their salary that must go towards their education. We help them

Vanguard, MONDAY, MAY 18, 2015 — 39

E-Commerce

Co-Creation Hub to invest over N10m in start-ups Stories by JONAH NWOKPOKU

igeria’s first social innovation centre, Cocreation Hub, CcHUB has announced it will invest between $15,000 to $25,000, about N3.3 million to N5.5 million, in seed funding in three tech startups. The ventures include: Grit Systems, Mamalette and Autobox. The deal will also invlove mentoring, business development support and office space to help in their quest to grow their businesses rapidly. Grit Systems is CcHUB’s first Internet of Things (iOT) venture, while Mamalette is an online community for mothers and mothers-to-be and Autobox is a platform for car owners to buy genuine auto parts and discover all things motoring. Grit Systems develops web-enabled technology for controlling and gathering data about

household and commercial electrical power consumption. Started in 2011 in Yaba

Lagos, CcHUB has worked with over fifty early stage ventures through its preincubation and incubation programmes including

Traclist, Truppr, Wecyclers and Vacantboards. In 2014, CcHUB graduated BudgIT, the first venture in its incubation portfolio.

TRAINING: From left Mr. Martins Awofisayo, MD, HarvestField Industries Limited, Mr. Sylvestre Jobic, Country Group Manager – Sub-Saharan Africa, Bayer Environmental Science, Dr. Bukar Ali Usman, Director, National Agency for Food and Drug Administration and Control (NAFDAC) and Mrs. Adjo Mfodwo, Manager – Anglophone West Africa, Bayer Environmental Science at a stakeholders training and seminar on pest control held in Maryland Lagos.

Openshopen emerges e-commerce platform of the year

omputer Warehouse Group, CWG's ecommerce platform, Openshopen.ng has been named e-commerce platform of the year at the Beacon of Information and Communication Technology awards held in Lagos recently. The website, polled the highest votes in its category following an online poll that featured over two hundred thousand entries via email and on the award's electronic voting portal.

Speaking on the award, Founder/ CEO, CWG, Austin Okere said: “Winning the award of the e-commerce platform of the year in just less than one year of introducing our solution to the Nigerian market speaks volumes about the unique value Openshopen offers to SMEs and how they have come to appreciate it.” According to him, “Our ecommerce platform has the capacity to support over 100 million stores. It offers businesses the advantage of building and promoting their

own brands rather than just dumping their goods and their fates in the hands of third parties, whose brands they are invariably promoting. By displaying their goods online, entrepreneurs significantly increase their sales, thereby creating jobs and ensuring inclusive growth for the economy.” Speaking on the credibility of the award process, the Chairman of the event and Chief Executive Officer, Zinox Technologies limited, Chief Leo Stan Ekeh said: “I

know that those that won the awards tonight deserved them because I can confidently say that the publisher, whom I know very well, is a man of integrity and he will give you what you deserve.” On his part, Former president of the Institute of Software Practitioners of Nigeria (ISPON) Chris Uwaje observed that CWG Plc is known for rolling out IT solutions that are remarkable for standard, customer satisfaction and reliability.

Rocket Internet launches online classifieds site

erman based Internet company, Rocket Internet has unveiled an online classified platform, Vendito for emerging markets. The site which is already live in Senegal, Uganda and Tanzania is expected to go live soon in Nigeria at Vendito.com.ng or Vendito.ng and in Ghana as Vendito.com.gh and Vendito.co.ke in Kenya. The company told the media last week that most of the URLs are not live to the public yet. According to Rocket Internet, “Vendito is an online classifieds website where people can buy and sell almost anything in their cities, from electronics, cars, real C M Y K

PayPal to trade under old symbol after split from EBay

estate to jobs and services. Currently we operate in Myanmar, Asia, under the name of Ads.com.mm which is the largest classified website in the country with more than 150, 000 visits per month. As part of our ambitious goals we recently stepped foot in West and East Africa, first milestones to our inspiring journey.

“Vendito’s mission is to provide a free, easy-to-use, fast and localized website that connects buyers and sellers locally to buy or sell their used items and/or services. Of course Vendito’s ambition is to become the leading general classifieds website in emerging markets. “Just like OLX’s speech, Vendito says if you have used

items you don’t need anymore and are taking up too much space in your house or office Vendito is the place. Vendito has a similar platform. Just like the former TradeStable which was merged into OLX recently which has looks similar to Gumtree but we think it’s less likely to launch in South Africa soon.”

Alibaba in litigation over fake goods

group of luxury goods makers in the United States has sued, CHinese ecommerce giant, Alibaba Group Holding Ltd contending that it had knowingly made it possible for counterfeiters to sell their products throughout the world.

The lawsuit alleged that Alibaba had conspired to manufacture, offer for sale and traffic in counterfeit products bearing their trademarks without their permission. The lawsuit alleged that Alibaba and its related entities “provide the

marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States.” The lawsuit cited, for example, an alleged fake Gucci bag offered for $2 to $5 each by a Chinese merchant.

ayPal, the payments division that’s separating from the online marketplace, EBay, will trade on the Nasdaq Stock Market as PYPL, its original ticker symbol before being acquired by the online marketplace in 2002. “I’m honoured and thrilled that PayPal is returning to its roots as an independent company,” said PayPal President, Dan Schulman, who will be the company’s Chief Executive Officer when the split is completed in the third quarter of the year. He added: “This is a meaningful symbol for the company because it represents our unbroken commitment to the spirit of the original vision that sparked the launch of PayPal seventeen years ago.” EBay announced the split last year after activist investor Carl Icahn said PayPal was being held back by its parent company’s slower-growing Web marketplace business. Schulman joined PayPal, which has 165 million customers in 200 countries, from American Express Co.

Netflix in talks to enter China

ideo streaming company, Netflix is in talks with Wasu Media Holding Co. and other potential partners to enter China’s booming online video market. Netflix is seeking a partner that has licenses for content on all devices, including mobile phones, computers and settop boxes, the report said. Netflix earlier said it was developing plans to launch a “modest” service in China if it can get permission to operate in the world’s most populous country. Chinese consumers are used to watching entertainment for free that is either supported by ads or pirated. “For every country we know what we want to do, but in China we are still exploring our options,” Chief Executive, Reed Hastings said in an interview earlier this year. A local partnership would be essential given the Chinese government’s strict controls over licensing for online content.

40 — Vanguard, MONDAY, MAY 18, 2015

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Vanguard, MONDAY, MAY 18, 2015 — 41

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42 â&#x20AC;&#x201D; Vanguard, MONDAY, MAY 18, 2015

Economy

Transition politics to restrict MPC economic policy decisions STORIES BY EMEKA ANAETO, ECONOMY EDITOR The last Monetary Policy Committee (MPC) meeting in the life of the present government holding today will largely shy away from key economic issues threatening the nation's economy, due to transition uncertainties. In order to facilitate the attainment of the objective of price stability and to support the economic policy of the Federal Government, a committee of the Central Bank of Nigeria (CBN) referred to as MPC is in place made up of the CBN Governor as the Chairman with the four Deputy Governors of the Bank, two members of the Board of Directors of the Bank as well as three members appointed by the President and two members appointed by the Governor. The MPC is the highest policy making committee of the CBN with the the mandate to review economic and financial conditions in the economy, determine appropriate stance of policy in the short to medium term, review regularly, the CBN monetary policy framework and adopt changes when necessary, and also communicate monetary/ financial policy decisions effectively to the public and ensure the credibility of the model of transmission mechanism of monetary policy. The MPC meets quarterly, and today's meeting is the second this year. Sources close to the Committee said nothing fundamental would happen despite the major fundamental challenges the economy has been facing in the past six months which have forced some reversals in the economic gains of recent years. For instance the inflation rate and exchange rates have been on headwinds while macroeconomic stability is also faced with dwindling revenue inflow and external reserves. Though no major policy decision would likely emanate from today's meeting sources close to the Committee indicate that considerations would be given to wide-ranging issues which the members consider as key decision points for the incoming government at national level. Some of the issues being put forward includes

inflationary pressure containment strategy, exchange rate management, money supply from fiscal perspectives amongst others. Commenting on the outlook of today's MPC the research team at Afrinvest, one of Nigeria's leading investment houses, outlined three major possible policy options before the Committee, first being to retain Marginal Rediscount Rate (MPR) at 13 per cent, public sector Credit Reserve Ration (CRR) at 75 per cent, private sector CRR at 20 per cent, liquidity ratio at 30 per cent and then announce a floating of the currency to eliminate pressure on external reserves. The next alternative course of action before the MPC today, according to Afrinvest, is to retain all the ratios above and then increase CBN's intervention rate at the interbank foreign exchange market to reduce the pressure on the reserves. However, Afrinvest says MPC also has the option of not only leaving all the ratios as they were, but it could also decide to stay with status quo on all economic and monetary policies to allow the in-coming

â&#x20AC;˘CBN Governor Emefiele

MPC also has the option of not only leaving all the ratios as they were, but it could also decide to stay with status quo on all economic and monetary policies to allow the incoming federal government to settle down before grappling with any major policy issues

federal government to settle down before grappling with any major policy issues. On the probabilistic basis, Afrinvest assigned 5 per cent likelihood for first option, 45 per cent for the second option and 50 per cent for the last option. This possible position, according to Afrinvest, would just be for political expediency rather than sound policy stance in the face of serious and urgent economic challenges. Some of the challenges include the heightening arbitraging in the currency market resulting from a halfbaked foreign exchange policy

which has left the parallel market margins at about 12 per cent as at last week when CBN rate was N197/ USD1.00 while parallel market was N122.5/ USD1.00. A few analysts believed that the post-election renewed confidence in the economy may favour inflow of foreign capital while starving off capital flight, but the ability of CBN to to maintain the induced forex market stability remains in doubt should the apex bank maintain the current level of intervention in the light of the external reserve position. The other challenge is the heightening inflationary pressure and the declining gross domestic products (GDP) both of which have threatened the gains of the recent years especially as it concerned the enviable position of Nigeria as Africa's largest and fastest growing economy. Economy watchers have expressed concern over the accerating of inflation rate this year, though expected as the fall out of the exchange rate crises but without any mitigation policy in place or being conceived. The general price level has assumed a steady upward trend since the initial November 2014 devaluation of Naira. With respect to the fiscal policy the MPC would likely be more concerned with speculations on the likely fiscal stance of the in-coming government rather than the policy thrust of the current national budget which had hitherto guided their policy positions.

Consumer price to remain upwards for several months ahead

he fall out of the direct and indirect devaluation of Naira in the fourth quarter of 2014 may have begun its chain of inflationary pressure amidst other worries over the economy to be inherited by the in-coming government headed by Mohammadu Buhari. Economy review and forcast by Afrinvest indicated that the sustained acceleration in consumer prices over the past five months broadly reflects the pass-through of the Naira depreciation in recent months

on input cost and import prices. Although, pass-through of Naira depreciation remained subdued - headline Index has only grown 3.2 per cent (April: 169.7 against December 2014: 164.4), relative to Naira depreciation of 11.3 per cent since the first currency devaluation in November 2014, economy analysts believe that recent development in the domestic monetary space may further pressure price levels in several months ahead. The main monetary

aggregate, Broad Money Supply (M2), rose 13.7 per cent in March 2014 to N19.1trillion, up significantly by 15.7 per cent from February. This, according to Afrinvest, may constitute additional headwind on consumer prices within the near term, given the perceived positive relationship between money supply and inflation in Nigeria. The Nigerian Bureau of Statistics (NBS) released the Consumer Price Index (CPI)

report for April last week showing 8.7 per cent headline inflation for April, 2015, measured Year-on-Year, a 20 bases points rise higher than 8.5 per cent reported in March. This is the fifth consecutive increase in the headline inflation rate. This is the highest headline inflation rate recorded since July 2013. According to the NBS report, the acceleration of inflation rate in April was due to uptrend in Individual consumption expenditure of households.

Vanguard, MONDAY, MAY 18, 2015 — 43

Advertising & Promotions Stories by PRINCEWILL EKWUJURU

he dishwashing liquid market is becoming interesting with new entrants promising to close the missing link witnessed in the market. Ireti Doyle, as Fairy’s godmother revealed to Princewill Ekwujuru, her plans and the brand’s power to deliver on promises. Read on. Endorsement Endorsement is not just something you pursue. You do your work and hopefully someone will look your way. I have been approached by some people but this didn’t work out. That we did not complete or tie the deal somewhere along the line, we were not a perfect fit. And it’s just a matter of time a brand will come along and there will be a match made in heaven. I am absolutely and personally proud to be selected by the number one brand in the world. If I have to wait this long to represent anyone it has to be a major brand. That is what has happened today. It is number one brand globally, not just based on hype but based on empirical information, based on trial and proof that it delivers on its promise. So far so good. The burden has been a very light one to bear.

I have responsibility towards the Fairy brand and Nigeria —Doyle

•Ireti Doyle It hasn’t been hectic. It has been a symbiotic relationship thus far. It began with a journey to Cape Town (South Africa) in March, 2014. We went to produce the commercial and all the materials that will be used during this campaign. It was

a wonderful experience. We had a top notch technical team. So, it has been a very enjoyable journey so far. I have enjoyed being Fairy’s god mother. Claim as global dish washing brand It has been proven that indeed Fairy is the number one global brand. There was research to prove that, so it was not just an empty claim. Could I claim that Fairy is number one brand here in Nigeria. Let us remember that we just launched in the market properly in March. The exercise that we are doing now (the interview session) is all part of creating awareness. The intent is not just to make appearance in Nigeria but to make appearance all over the African continent starting with Nigeria. Why I cannot tell you categorically that Fairy is the number one brand in Nigeria purely because it’s new, but I will beat my chest, and actually I can bet a year salary,

CSR, sustainability our policy thrusts—IDL

nternational Distillers Limited, IDL, manufacturers of Chelsea dry gin, Squadron, says Corporate Social Responsibility, CSR and sustainability runs in the Deoxyribonucleic Acid, DNA, (molecule of life) of the company. The Managing Director, Engr. Patrick Anegbe, asserted this when he said, “as a policy, our company believes that business is not just about making profit, but also touching lives of communities where we operate in a positive way.” “Hence our involvement in various CSR activities over the years in communities where we operate.” While listing some of the achievements of the company in CSR, during the commissioning of a block of four classrooms and two offices, noted that the company had carried out extension of treated drinking water from the company ’s factory to Igboloye community, Ota, donation of borehole to the same community and donation of 500 KVA transformers. Others are donation of a

block of three classrooms and computers to Iganmode Grammar school, Ota, renovation of a block of five classrooms for St Michael Primary School, and block of three classrooms for St Peter’s Primary School 2, all in Ota. He went on to say that the company completed an assembly hall for customs secondary school, Idiroko,

donated sets of computers and printers to the Special Marshal unit of the Federal Road Safety Corps, FRSC, Ogun Command. Donated 5.5KVA generator to National Identity management Commission, and N250,000 to Ogun state sports council towards the national Sports Festival, he stated.

Airtel boss wins CEO Brand Personality award Managing Director and Chief Executive Officer of Airtel Nigeria, Segun Ogunsanya, has been named CEO Brand Personality of the Year by marketing communications magazine, Marketing Edge. According to the brand and marketing publication, Ogunsanya’s enviable track record as CEO of Airtel Nigeria, marketing-facing accomplishments and immense contributions to the development of the Nigerian marketing communications industry, set him apart as the CEO Brand Personality of the Year (2014).

Receiving the award on his behalf in Lagos, Chief Commercial Officer, Airtel Nigeria, Maurice Newa, dedicated the award to the company ’s stakeholders, thanking subscribers for voting for the Airtel brand. According to him, Airtel appreciates the belief, trust and confidence its customers repose on the brand, noting that the telco will continue to go the extra mile to delight telecoms consumers with innovative mobile Internet and voice solutions as well as first-rate customer experience.

that within the next one year Fairy will be the number one brand because it delivers on its promise. All you have to do is try it once and you will see that this dish washing liquid delivers on all its promises. It’s effective on oily dishes. Your bottle of Fairy last two or three times longer. Use a little drop of Fairy and it washes many more dishes that you wouldn’t use any other brand. What I can say to consumers is that a trial will convince you. I am so convinced about this product. I encourage people to give a try, and please make their findings public. If we are lying put it out there. We are 100 percent sure of the facts that we are putting out there. It’s just a matter of time before Fairy takes over the market not just in Nigeria but all over Africa. Taking the brand from factory to kitchen Again, I say we have been promoting this brand since March and as Nigerian’s you know we had elections in between. As a socially conscious Nigerian while I have responsibilities towards this brand, I have responsibility towards my nation. We didn’t think that the period of the election was right to be talking about dish washing liquid. That can of slowed us down a bit. But we have had a couple of interviews; We have done insertion with the marketers. Last week we had a very vibrant tweeter interview. I was told on the day we were number seven on the trending list. I can assure you there will be a lot more interaction. You will be seeing me at malls, getting active with the people and telling them about the brand, convincing them to give it a try. Once you try Fairy you will never go back again. Price and competition You can get a gigantic bottle for 2 kobo but my question is how many dishes is it going to wash? Are you going to be penny wise and pound foolish.? Fact is one bottle of Fairy washes 14, 763 plates tested and proven. So are you going to spend N100 extra for a bottle that is going to last you about four times longer than a gigantic bottle that you literally have to pour half of it. You know, we eat very oily food in Africa so to get your dishes quicky clean you really have to use almost a quarter of your gigantic bottle as opposed to a few drops of Fairy. All I require you to do is please give it a try. And when you see that a bottle of Fairy lasts you six times longer, I think people will go for value and quality as opposed to quantity.

New look Close–up pastes hit market

nilever Nigeria Plc has re-launched Close – Up toothpaste brand across three variants of Deep Action Red Hot, Naija Herbal gel and herbal paste in new logo and packages. The Close-up brands according to the company is poised to cater to the oral care of Nigerians with a formulation that contains micro-shine crystals to clean deep corners of the mouth and active zinc mouth wash that kills 99.9 percent germs, giving long lasting fresh breath for 12 hours. Speaking, Branding Building Director of the company, David Okeme, said Unilever is excited also to introduce Davido, a musician, as the brand ambassador for Close-up. This he stated is “geared towards engaging our core target the Nigerian youth.” Okeme went on to say that Close-up is vibrant, intense and sensrially charged toothpaste that consumers can feel working in their mouth delivering noticeable fresher breath and whiter teeth for a confident smile. “It gives you the confidence for intense moments of closeness.”

PRCAN becomes ICCO member

he Public Relations Consultants A s s o c i a t i o n (PRCAN), the umbrella body of PR consultancy firms operating in Nigeria, has been admitted into membership of the I n t e r n a t i o n a l Communications Consultancy Organization (ICCO). PRCAN’s admission was announced by the ICCO Chief Executive, Francis Ingham, at the organization’s bi-annual Board of Management meeting which held in Vienna, Austria, on April 1617, 2015. Following PRCAN’s inclusion, the PRCAN President, Mr. John Ehiguese, was also appointed to the Board of Management of the Organization, for a maximum tenure of four years. By this appointment, he joins 30 other members in ICCO’s highest decisionmaking authority. C M Y K

44 — Vanguard, MONDAY, MAY 18, 2015 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

Fuel subsidy dilemma: The sensible way out

he severe social discomfort and economic dislocation caused by fuel scarcity nationwide may stampede the incoming Administration of President-elect Muhamad Buhari to settle the outstanding invoices of Petrol Marketers, and also accept over N200bn penalty interest charge for delayed payments and exchange rate differentials consequent upon the almost 20% recent Naira devaluation. Some critics may suggest that the government representatives who accepted liability for such oppressive penalty charges, would not readily make such an undertaking if they represented their own private corporations or family assets, particularly in the face of a bleeding revenue base and rapidly increasing debt burden. Nonetheless, Buhari may be forced to tow the same path of reckless financial management, if petrol marketers remain adamant and insist that government should first settle alleged outstanding debts before they commit to any fresh fuel importation; unfortunately, the longer it takes to reach an agreement on actual liability, interest payments may continue to increase and further bloat government’s indebtedness. Clearly, however, the retired General certainly does not need an early confrontation with the public or indeed Labour who will as usual insist that subsidy should only be removed after sufficient local refineries can meet domestic consumption! In the event however, that refineries (depending on size) have

between 18-36 months gestation, this may suggest that subsidy may not be wished away very soon! Furthermore, Labour and Civil Societies also recognise that it would be foolhardy to accept deregulation, if the Naira rate continues its steady plunge against the dollar as fuel prices will simultaneously continue to spiral! Conversely, Buhari’s Team may plead that it is not sensible to dedicate over 20% of federal budgets to subsidy and almost 50% of total Crude Export Revenue to consumption of imported fuel annually. We cannot predict the length of the ensuing stalemate, but as usual, in the interest of the nation, government and Labour are likely to once more agree to split the subsidy burden. Clearly, government’s share of subsidy will nonetheless rise if the Naira continues its downward slide or if “fortuitously” or “unfortunately”, crude oil prices rebound once again. For example, if the Naira is left to float as currently proposed by the Banker’s Committee, Naira could well exchange for over N300=$1 before the end of 2015, particularly if the instigation of systemic excess Naira remains an abiding feature of CBN’s monetary strategy. Invariably, with such Naira depreciation, fuel prices will spiral about 50% above the price on which subsidy was initially calculated. Consequently, unless pump prices are adjusted upwards, government’s share of the subsidy burden will once again balloon and bring us back to square one, where subsidy exceeds 20% of annual federal budgets.

Furthermore, in the absence of fiscal discipline, subsidy refunds to marketers will invariably be delayed and will accumulate as usual, until the issue of delayed payments and exchange rate differentials surface once more to trigger fuel scarcity with the attendant painful, social and economic dislocations. Similarly, higher crude prices will also translate to higher fuel prices and increasing subsidy values. In his attempt to end this horrendous cyclical narrative, Buhari will be well advised to

Higher crude prices will also translate to higher fuel prices and increasing subsidy values

recognise that subsidy can be eliminated if crude price remains below $50/barrel, so that ex-refinery cost remains low; ironically, if this happens, our oil revenue base will unfortunately remain depleted and further threaten the Naira exchange rate as is currently the case. Ultimately, increasing speculative dollar demand will instigate further Naira depreciation which would inadvertently pump up fuel price and also swell the existing value of subsidy. Clearly, if weaker Naira rates instigate higher fuel prices and fuel subsidy values, it

Apex Bank. This bizarre payments strategy apart from instigating excess Naira, also induces the unforced error of the official provision of presumably ‘scarce’ public sector dollars for the unsubstantiated forex requirements of the black market. Instructively, however, if the foreign exchange component of federal allocations are paid with dollar certificates rather than the outright monthly substitution of Naira values which precipitate the constant spectre of surplus Naira and its oppressive train of inflation, huge cost of funds, a weaker Naira as well as higher fuel prices, which make the removal of subsidy impossible. Incidentally, the above recommended reform in fiscal allocations, will gradually mop up the unrelenting flood of surplus Naira which swallow the dollar rations sold weekly by CBN; clearly, if this fiscal payment practice is sustained, the Naira may still ultimately exchange below N100=$1 despite reduced crude oil revenue within Buhari’s first year in office. Thus, Buhari will avoid a protracted social and economic dislocation, if he quickly engages Organised Labour and Civil Societies on a consensus to sustain partial deregulation with government, “reluctantly” conceding 50% of the difference between the current N87/litre and the unsubsidized current actual market price of about N150/ litre; with this arrangement, the agreed pump price would be set at N120/litre excluding government’s subsidy of about N33/litre.

stands to reason that an increasingly stronger Naira should also reduce fuel price and ultimately eliminate subsidy while new refineries will be established with the complete deregulation of the sector. For example, if Naira exchanges for N100=$1, this would be a 50% appreciation from the current N200=$1, in this event, the unsubsidized current actual fuel price of about N150/litre will immediately fall below N80/ litre, and make N7/litre available as sales tax if the current regulated price of N87/litre remains unchanged. Notably, the relative sales tax potential will increase beyond N7/litre if the Naira strengthens below N100=$1. The million-dollar question however, is how the Naira can appreciate when oil revenue is dwindling; after all, as some experts claim, it is the size of our reserves that defines the exchange rate of the Naira! Curiously, in the Nigerian context however, in order for CBN to build up its dollar reserves, it must consciously continue to induce the suffocation of the domestic money market with surplus Naira, despite the adverse attendant economic consequences. Expectedly, with such a Naira antagonistic strategy, the Naira exchange rate will be pummeled when it is constantly pitted against the paltry dollar rations, auctioned weekly by CBN from its caché of public sector dollars which were earlier captured and substituted with Naira allocations at an exchange rate that is unilaterally determined by the

Business & Economy CHESTRAD set to bridge poverty gap in Nigeria By PETER EGWUATU

H E S T R A D International, a non profit making organisation said it is committed to bridge poverty gap among the people in the country as inequalities in access to basic assets including education, health and productive inputs are on the rise. Speaking to newsmen in Lagos, Dr. Bimbo Ogunkelu, former Minister for Integration and Chairman of CHESTRAD said “ CHESTRAD is committed to crowd funding so that it can assist the government in its quest to alleviate poverty in Nigeria. It C M Y K

is in this regard that we are inaugurating steering committee and to introduce a new philanthropic NGO, “I Will Give” to the Nigerian public. “According to him “ CHESTRAD has track record for over 25 years of its existence and perform similar work like red cross society.” In her own remark at the briefing, Dr. Lola Dare, President CHESTRAD International said “The middle class in Africa and Nigeria in particular expands almost as rapidly as its projected economic growth. At the same time, inequalities in access to basic assets

including education, health and productive inputs are on the rise. This picture is markedly demonstrated in Nigeria, home to the greatest wealth in Africa, yet also some of the most dismal levels of access to these basic services. She expanded that CHESTRAD International seeks to take advantage of this increase in wealth to utilize the capacities that exist in the middle classes for social giving.According to her “ We seek to leverage economic growth at individual and corporate level for the purpose of African social development, with activities in Nigeria in the first instance.

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