Naira devaluation hits industries hard

JUNE 22, 2015

AGM - From left: Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar N. Onyema, OON; President, NSE Mr. Aigboje Aig-Imoukhuede, CON and Secretary to NSE Council, Ms Tinuade Awe at the Nigerian Stock Exchange 2015 Annual General Meeting in Lagos.

Naira devaluation hits industries hard FG’s plan to create 3 million jobs annually under threat — MAN LCCI demands zero import duty for critical raw materials

By FRANKLIN ALLI

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OMPANIES in the manufacturing sector of the economy that source foreign exchange to import raw materials and products have been hit hard by the devaluation of the naira and the suspension of Retail Dutch Auction System (RDAS) by the Central Bank of Nigeria (CBN).

At the interbank foreign exchange market, the exchange rate of the naira to a dollar is N196.9 while in the black market it hovers between N210 to N214 to a dollar. Similarly, British Pound Sterling exchanges between N303 to N304 to the Naira, while thed

Euro exchanges for N222.

Investigations by Financial Vanguard, showed that the high

CBN should examine manufacturers’ forex demand trends to ascertain the actual needs of each company

exchange rate occasioned by the suspension of RDAS policy, has wiped smiles off the faces of operators in the sector since it was implemented by the apex bank in February to tighten control on the foreign exchange market, in a bid to protect the nation's external reserves and save the Naira from further slide in value.

Dr. Frank Udemba Jacobs, President of Manufacturers Association of Nigeria, MAN, noted that the impact is enormous on all manufacturers, especially those that depend on imported raw materials.

According to him, the Federal Government's plan to create three million jobs annually will be a mirage

if the current exchange rate is not addressed quickly. He urged Federal Government through the CBN to create a special foreign exchange window for manufacturers.

In addition, he requested the CBN to examine manufacturers’ forex demand trends to ascertain the actual need of each company for the importation of machines, spare parts and raw materials. He assured that MAN will validate beneficiaries to ensure that only bonafide manufacturers have access to such special foreign exchange window.

Also, Mr. Okey Akpa, the Chairman, Executive Committee of Pharmaceutical Manufacturers Group of MAN, disclosed that the negative effects of the CBN policy of RDAS have started to trickle down to the entire pharmaceutical industry. He said companies operating in the sector are spending so much on importation of pharmaceutical glass bottles and packaging materials that are not available locally. He said this has led to further increase in the cost of production.

According to the Chairman of United Allied Spare parts Dealers Association (UASPADA), Chief Bartholomew Achukwu, his members are also adversely affected. “Today the problem is dollar issue, all our businesses are collapsing. We are expecting President Muhammadu Buhari to address this issue as it is hampering growth in trade. Going by his antecedent, we believe that the economy of Nigeria will soon be better than any other country around the world,” he said.

Mrs. Olaitan Efughi, Chief Executive Officer , Annabel Boutique also lamented that operators in the sector are also feeling the negative effects of the foreign exchange transactions. “I buy my goods from Dubai and Hong Kong, and I sell mainly to retailers and others who buy for personal use. But foreign exchange is a problem; most banks don’t sell BTA for people who go to Dubai for business, apart from that, there is a limit of the amount of money that the bank allows, you are not to spend more than $4000 per quarter, so basically, you have the money, but you can’t really buy much,”

Continues on page 22 C M Y K

22 — Vanguard, MONDAY, JUNE 22, 2015

Cover

Entrepreneurial Education Revolution: An Imperative for Sustainable Development in Nigeria: Part 1

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PRESENTATION - From left: Mr. Tunde Akerele, Chief Finance Officer, Proton Energy; Dr. Sam Amadi, Executive Chairman, Nigeria Electricity Regulatory Commission (NERC); Mr. Oti Ikomi, Executive Vice-Chairman, Proton Energy; and Mr. Mark Fancett, Proton Energy Adviser, a t t he presentation of 150mw licence to Proton Energy by NERC in Abuja

Naira devaluation hits industries hard Continued from page 21 she stated.

Alhaji Remi Bello, President of the Lagos Chamber of Commerce and Industry, LCCI, also added that high exchange rates is a major challenge currently facing many real sector operators, especially the medium and large firms.

According to him, the chamber has reviewed the policy and observed that although it was targeted at providing support for the real sector of the economy because of their strategic importance to the development process, job creation and inclusive growth, yet the sector is the first natural victim of the closure, particularly the few that had access to this window.

He identified the immediate implications on the sector as follows: “It has resulted in the escalation of production cost for firms that had access to this forex window. Such firms will experience cost increases of up to 20 percent. This would impact on sales performance, profit margins and ultimately capacity utilisation of manufacturing companies in the country.

"Import duty and other port charges which are computed as a percentage of import costs have also correspondingly increased.

This implies additional pressure on operating costs for erstwhile beneficiaries of the CBN RDAS forex window.

Firms funding requirements in naira will increase to reflect the new exchange rate and this has implications for cost of funds.

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“Many firms, especially manufacturers with high foreign exchange exposure have been thrown into loss positions as a consequence of the depreciation of the naira over the last couple of months and the eventual closure of the RDAS window.

“Exchange rate induced losses could trigger a new wave of Non-Performing Loans in the banking system and this has implications for financial system stability.

However, given the record disparity between the CBN RDAS forex window; the interbank and the parallel market rates, it was clear that the RDAS Forex window was not sustainable. The CBN could obviously not meet the huge demand for forex under the RDAS window.

"In spite of repeated assurances, many genuine requests for forex for industrial raw materials and other vital inputs were denied by the CBN. Foreign financial obligations could also not be met by many firms as remittances were affected.

This resulted in serious confidence issues among foreign creditors of Nigerian companies with some credit lines to Nigeria companies

Port charges should be waived for raw materials importation and machineries

being put on hold.

“The huge premium of over 20 per cent was a major incentive for round tripping, corrupt practices in the management of the forex, speculative activities in the foreign exchange market and many other abuses. It was also a major source of uncertainty and volatility in the market. There were concerns about the lack of level playing field in the management of the RDAS window. In the light of all these, it is difficult to fault the decision of the CBN to close the RDAS window."

Meanwhile, the LCCI has proposed measures to cushion the effect of the CBN policy on investors with high foreign exchange exposure.

It said that CBN should urgently provide a refinancing facility as life-line for investors in the economy which have high foreign exchange exposure.

“The sustainability of this class of businesses is currently at risk. We recommend a minimum refinancing facility of N200 billion to be provided at single digit interest rate and a fifteen year tenure. All critical raw materials and other imported inputs of manufacturing firms should henceforth attract zero import duty. All machineries and equipment should attract zero import duty.

"Port charges should be waived for raw materials importation and machineries. All these are necessary to minimize dislocations in the economy and ensure the continued survival of the real sector,” the chamber stated.

lbert Einstein once defined insanity as doing the same thing over and over and expecting different results, while the French classical author, Francois de la Rochefoucauld said ‘ the only thing constant in life is change’.

This paper stresses the importance of entrepreneurship education towards enhancing sustainable development in Nigeria. The problems facing the country ranging from high rate of poverty, youth and graduate unemployment; overdependence on foreign goods and technology; Low economic growth and development; among others.

This paper therefore argues that entrepreneurship education will equip the students with the skills with which to be self-reliant. The objectives and strategies for redesigning entrepreneurship education are also discussed.

The paper also recommended that educational programmes at all levels of education should be made relevant to provide the youth the needed entrepreneurial skills. It is also recommended that the government should give adequate attention to entrepreneurial development in the country through the provision of good economic environment.

So it is on this premise I would like us to see the Nigerian educational system in light of current realities in the st 21 century. A careful look of the current state of affairs in Nigeria reveals that we are in a 21st century economy with a 19th century education system.

A system whereby much emphasis is still placed on the conventional classroom environment with much reverence for certificate for graduates who in most cases are trained to be job seekers as evidenced in present high unemployment rate in the land. However, we must accept the fact that times have changed and we must adjust by transiting from the old styled era of Adam Smith inspired concept of the ‘industrialized specialist’ which has outlived its usefulness to a more dynamic, resourceful and I.C.T based model where skills and creativity takes precedence.

Without deviating from the topic of my speech which is Entrepreneurial Education Revolution in Nigeria, I would like to briefly define some of the concept in the topic.

WHO IS AN ENREPRENEUR? An entrepreneur is a person who is driven to establish a business to take advantage of the financial opportunities and personal fulfilment offered, by pursuing their own dreams and shaping their own destiny in local, national and global economies. I personally define an entrepreneur as anyone who can convert what he loves doing to a moneymaking venture. Entrepreneurship on the other hand is said to be the process of planning, operating and assuming the risk of a business. It has also been seen as a process of creating a unique value. For the purpose of this speech, I would be limiting education to the activity of teaching about a particular subject.

Revolution on the other hand has been defined by The Macmillan English dictionary as a sudden or major change, especially in ideas or methods.

A revolution signifies a drastic turn around, a new way of thinking and acting.

So at this juncture, what then is Entrepreneurial Education?

Entrepreneurial education is a lifelong learning process, starting as early as elementary school and progressing through all levels of education, including adult education.

Entrepreneurial education focuses on developing understanding and capacity for pursuit, of entrepreneurial behaviours, skills and attributes in widely different contexts. It can be portrayed as open to all and not exclusively the domain of the high-flying growth-seeking business person. The propensity to behave entrepreneurially is not exclusive to certain individuals.

Different individuals will have a different mix of capabilities for demonstrating and acquiring entrepreneurial behaviours, skills and attributes. These behaviours can be practiced, developed and learned; hence it is important to expose all students to entrepreneurial education.

Vanguard, MONDAY, JUNE 22, 2015 — 23

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overnors of the 36 states of the federation rose from a meeting in Abuja last week Wednesday, resolving to meet President Muhammadu Buhari on the financial crisis crippling the affairs of some states in the federation. According to the chairman of the Governors’ Forum, Abdulazeez Yari, the governors viewed the financial crisis facing the states as national issue as there are also Federal Government agencies that owe salaries for upward of seven to eight months.

The new chairman of the Governors' Forum said: “We decided not to talk of the bailout directly, though the problem we observe is not only a state matter. It is a national matter. Some federal agencies are being owed for seven months and above. The Federal Government cannot operated on rents from oil whatever debt is outstanding just do it alone because of the export. It is a pity that no state as the new governor of Akwa government has developed its Ibom is trying to do to the dwindling economy.

"So, instead of requesting for internal resources to the point private jet his predecessor the bailout, because we have that it can stand on its own acquired with state money instead of going cap-in-hand to to make sure that the Federal without federal allocation.

While the oil boom lasted, no beg the Federal Government for Government has liquidity, but where will the Federal government functionary in a bailout.

In Akwa Ibom for instance, the Government find the liquidity? these states was ready to put It is sending a very wrong on a thinking cap that a day will former Governor bought a signal that the states are come when rent on oil will dry private jet for the state, built a football stadium that may only be asking for bailout and we all up. used once in a year. The jets While the rents accruing from know that the economy of the country is in a very bad shape. oil lasted, governors were living owned by state governments are "So, instead of sending a bad like lords of the manor. They parked and maintained with signal and aware of the flew and hired private jets, state funds. The question is; implications, we are asking moved around in fleets of why should a state own a private the Federal Government to vehicles and kept chains of jet?

Akwa Ibom State governor, pay the states for the Federal aides. Some were busy using Government jobs that have state resources to marry for their Emmanuel with his private sector been executed by the states. children and themselves. They background is said to be "We would be asking the hosted lavish parties. The unfavourably disposed to the Federal Government to settle money they should have private jet acquired by his the backlog owed the states. invested in projects that would predecessor, Godswill Akpabio The Federal Government have brought future returns to to ease his movement outside the owes some states N10 billion, states was wasted on frivolities. state and is contemplating N20 billion, N30 billion and Some of these governors built Lagos State, N50 billion. So, if mansions with state money in we can get back some of this the name of Governor’s Lodge money, we can settle some of in several locations in their to meet their the backlog of wages and states Federal ostentatious lifestyle. salaries."

These are monies that could The situation facing states at Government the moment is self inflicted. have been used for incomeshould tell these State governors had the yielding ventures. Some of these governors have invested opportunity to develop their shameless local economies and grow their their state's money in private governors in internal revenue generation. companies which they have But many of these state dishonestly converted to their unequivocal governors prefer to rely on personal use. Such properties terms that it allocation from the federation now that the chickens have will not bail out account. For too long, the come home to roost, should be Nigerian economy has lived sold and the money realised any state on rentals. The economy from them used to offset

Governors: No bailout coming from anywhere disposing of the aircraft.

The governor is said to be shopping for buyers of the jet to relieve him of the burden of fuelling and maintaining it.

Akwa Ibom is not the only state with a private jet, Danbaba Suntai of Taraba had even gone to the extent of not only owning a private jet but flying one himself.

It is heart-warming that the state governors are aware that the Federal Government itself is cash strapped and cannot help itself or bail out the states.

The Federal Government should tell these shameless state governors in unequivocal terms that it will not now or in the future bail out any state.

They should be told to go back to their states and straighten up their finances. In fact, the Federal Government should begin to make allocation to states based on accountability.

States must account for the money they get from the federation account monthly and they should be made to publish their annual statements of account. They should not just be collecting money and not give proper account for it. Every state must publish its account as well as every local government. This is the kind of change the APC government and legislature should bring about in the country.

A survey has shown that Nigerian politicians, especially state governors, deliberately

involve themselves in flagrant and ostentatious expenditure as a way to show off their class, without the knowledge that their action is responsible for the underdevelopment of the economy.

Many governors are richer and more powerful than some presidents around the world.

In the states, governors are the beginning and end of all wisdom. The governor is the state and the state was created for his good pleasure. They may occasionally try and display some decorum in treating the state’s funds as belonging to the citizens, but don’t be fooled.

Much of that fund is their pocket money literally. In some states, the SURE-P fund for instance, is essentially the governor’s chop money.

Security votes and ecological funds belong to this category too. No two governors are alike though every state gets the governor it deserves.

Nigerian governors are the masters of their universe, the lords of their manor and conquerors of their realms.

They are capable of being dictatorial, democratic, benevolent, malevolent, difficult, simple, matured and childish all at once. They are tough, calculating and ingenious in maneuvering the turbulence associated with that unique office.

Now that the financial situation in states is precarious, state governors should come off their high horses and face reality. They should cut down on their frivolities and spend the state resources on what is necessary. Time is now for altruistic service. There is no bailout from anywhere.

Business& Economy Hill+Knowlton Strategies debuts in Nigeria

By SEBASTINE OBASI

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eading international communications consultancy Hill+Knowlton Strategies has expanded its physical footprint in Africa with the launch of a new office in Lagos, Nigeria.

Hill+Knowlton Strategies Nigeria builds on the company’s existing strong presence in Sub-Saharan Africa and further extends the agency’s ability to serve its rapidly expanding client interests in African countries in a fully integrated way. The Hill+Knowlton Strategies global network consists of

some 88 offices, including key African markets such as Egypt, Ghana, Kenya, Rwanda, South Africa, Tanzania, and Uganda.

Hill+Knowlton’s entry into Nigeria is said to reflect a recognition of the vast economic and commercial potential of the West African country, which sits among the top five investment countries in Africa, and which has seen a surge in capital inflows into the market.

Additional streams for investment have also opened up, with the establishment of fledgling economic sectors in the Nigerian market. The growth in investment and

funding for domestic companies, as well as an increase in Foreign Direct Investment (FDI) and joint ventures in the country, has created an attractive platform for H+K from which to grow and develop its client base.

“Global businesses with longterm growth strategies are focusing on the African continent,” said Lars Erik, Chairman and CEO of Hill+Knowlton Strategies, Europe, the Middle East and Africa.

“Nigeria has the largest economy in Africa, as well as a population of 170 million people which is expected to expand to 200 million by 2019.

TRADE MISSION - From left: Chief Fola Osibo, Chairman, Export Committee, Nigerian British Chamber of Commerce (NBCC); Mr. Hassan Mohammed Hassan, Minister of Industry, Trade & Investment, Nigeria High Commission, London; Prince Dapo Adelegan, Deputy President NBCC/ Mission Leader and Mr. James Houston, Chairman, NBCC-UK Network at the Nigeria House at the ongoing Export Trade Mission to the UK. C M Y K

24 — Vanguard, MONDAY, JUNE 22, 2015

Business & Economy

37 ships expected in Lagos

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hirty seven ships laden with petroleum products, food items and other commodities are expected to arrive in Apapa and Tin-Can Island ports in Lagos, from June 18 to June 30.

The Nigerian Ports Authority (NPA) disclosed this in its daily publication, ‘Shipping Position’, made available to newsmen in Lagos.

According to the document, the contents of the expected ships are petrol, kerosene, diesel, bulk urea, fresh fish, steel products, bulk wheat, bulk sugar and ethanol.

It said that other vessels would arrive with general cargo, buthane gas and containers.

The document explained that nine ships with petrol, aviation fuel, crude palm oil, rice, fish and general cargo are waiting to berth at the ports. 23 other ships had arrived the ports discharging bulk wheat, fertiliser, base oil, rice, general cargo, fresh fish, gypsum, base oil, petrol and diesel.

Port charges: Court adjourns Shippers’ Council, terminal operators’ hearing T

he Federal Court of Appeal, Lagos, has adjourned a case between the Nigerian Shippers’ Council (NSC) and the Seaports Terminal Operators Association of Nigeria (STOAN), over port charges, till Feb. 4, 2016.

The Presiding Judge, Mrs Uzoamaka Anyanwu, said that the court adjourned the case as a result of the backlog of pending cases the court had to handle.

STOAN had earlier filed a

suit against the NSC over restriction of increase in

The court in December 2014 upheld the status of the NSC as the economic regulator of the seaports

progressive storage charges and reversal to what obtained in May 2009. The suit was struck out on technical grounds

by Justice Ibrahim Buba of the Federal High Court, Lagos.

The court in December 2014, consequently upheld the status of the NSC as the economic regulator of the seaports.

Justice Buba also ordered STOAN and Association of Shipping Lines Agencies (ASLA) to revert to the various charges as obtained in 2009

CBN calls meeting with banks on FX rules

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entral bank has called a meeting with chief executives and treasurers of commercial banks to discuss issues surrounding its policy on the foreign exchange market, multiple banking sources told Reuters.

The central bank imposed tight controls on the foreign exchange market in February to curb speculation on the naira and save its dwindling foreign reserves in Africa’s biggest economy.

Before setting the restrictions, the central bank had been battling to prop up the naira after a sharp fall in the price of oil, Nigeria’s main export, which triggered a selloff in assets by foreign investors.

The central bank also fixed the rate at which banks can buy dollars from oil companies.

Traders were upbeat on the outcome of the meeting which they claimed was long overdue to ease the tight control in the market and allow the local currency to find its real value.

“We are anticipating that the meeting would naturally discuss the present market conditions and explore possibility of reviewing the tight control on the forex market,” one senior treasurer told Reuters.

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ANNIVERSARY - From left: Mr. Fidelis Ajibogun, Zonal Coordinator, National Lottery Regulatory Commission; Mr. Abdullahi Ibrahim, Group Executive, Technology and Services, FirstBank, Mr. Adolphus Ekpe, Director-General, National Lottery Regulatory Commission; and Mr. Henry Uwadiae, Deputy Director, National Lottery Regulatory Commission at a courtesy visit by the National Lottery Regulatory Commission to FirstBank in commemoration of the 10th Anniversary of the Commission.

and, as directed by the NSC. The court ordered ASLA and STOAN to refund excess revenue made from 2009 to date to the Cargo Defense Fund. Meanwhile, counsel to the second defendant, the Shippers’ Association Lagos State (SALS), Mr Osuala Nwagbara, said he would be glad if the date of hearing was brought forward. Nwagbara said his client was suffering because STOAN and ASLA were still collecting the charges.

Counsel to the NSC, Mr Emeka Akabogu, expressed dissatisfaction with the long adjournment, saying that he would meet his client (NSC) on the next step to take.

Akabogu said the counsel to the Appellant (STOAN), Mr Femi Atoyebi, failed to file the appellant’s brief as ordered by the court since the last adjournment.

“We are not satisfied with the long adjournment, we are going to meet with our client on the steps we are going to take,” the lawyer said. Akabogu noted that the case was an urgent national matter and it deserved outmost urgency by the court.

However, counsel to ASLA, Mr Chidi Ilogu said the court was not ready to take the matter because it had a crowded list of cases. “It is because of the circumstances. We do not have a choice than to accept that date,” Ilogu said.

Global economy loses $250bn yearly to fake products — Philips

By PROVIDENCE OBUH

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hilips Innovations Nigeria Limited, providers of personal health and lighting solutions businesses of Royal Philips of the Netherlands, has decried the over 50 percent faking of its products in Nigeria, saying that world-wide cross border trade in physical counterfeiting alone, cost the global economy $250 billion yearly.

To this end, Philips Nigeria has announced plans to kick-off a campaign known as “Buy Original” which had already started in Kenya since October 2014 and will move across West Africa during June 2015 to combat the menace.

Speaking at a media briefing in Lagos, General Manager, Personal Health, Philips West Africa, Mrs. Chioma Iwuchukwu-Nweke, said that, Counterfeiting is designed to mislead

the public and all who are involved in buying and selling the product in order to make easy money by free riding on the reputation of others, “In Nigeria and other countries, a number of Philips lamps (lighting products) sold are counterfeits. Cheap components found in the counterfeit lamps, such as the driver which regulates electrical voltage, cause the lamp to fail well before its stated lifetime. Also, it can prove to be a hazard because of the poor construction. Counterfeits are therefore dangerous to consumers.”

She disclosed that the company would be introducing innovative hologram security stickers for lamps, providing a 16 digit code validation code for all Philips Lighting products, as well as the “original” sticker for their consumer lifestyle and lighting products to enable consumers to easily and instantaneously identify originals.

Iwuchukwu-Nweke said, “For all Philips consumer appliances and

Philips AVENT baby products, Philips is introducing a hologram sticker on packaging so that consumers can identify authentic products. It is hard to pinpoint where the fake product or packaging is originally made, where the shipment originates, and who is responsible for exporting the product.

“While there are no reliable industry wide statistics on the number of products that are counterfeits; from market feedback we receive, we know that this issue is very severe. Philips wants to work alongside consumers, government authorities, other MNCs and relevant organizations to see how we can collaborate together to enlighten and inform the consumers on matters relating to counterfeiting.

We urge the public to become more vigilant and question products that seem to be unusually cheap, appear poorly made, or have generic packaging; especially when shopping at more traditional trade stores.

Vanguard, MONDAY, JUNE 22, 2015 — 25

Business & Economy

Billfinger divests 33.4% stake in Julius Berger Dangote to open N78.4bn cement factory in Asia

By FAVOUR NNABUGWU

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ilfinger SE, a minority shareholder with a holding of 33.4 per cent in Julius Berger Nigeria Plc (JBN) has expressed its decision to divest its stake to Nigerian investors.

In a statement, the construction giant said Billfinger has notified the Board of Julius Berger of its decision to dispose of its remaining stake in JBN to long term Nigerian investors on or before the end of June 2015 JBN states that this proposed transaction will lead to the exit of the representative of Bilfinger SE from the Board of JBN. The Company added that the decision is based on Bilfinger ’s strategic realignment from a construction company to an engineering and services group in the last decade which saw Bilfinger SE divest totally from its construction activities.

The Board of Julius Berger Nigeria Plc and the Executive Management strongly believes that the exit of Bilfinger SE will not impact on JBN in view of the strategic business directions being undertaken by the Board and Management of the Company which would sustain and increase JBN’s efficiency and responsiveness as well as set basis for a future of long lasting success.

The

By FAVOUR NNABUGWU

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AGM: From left, HRH Igwe Peter Nwokike Anugwu discussing with former Managing Director of Julius Berger, Engr. Wolfgang Goetsch during the 45th AGM of Julius Berger Plc in Abuja. Photo by Gbemiga Olamikan. th conglomerate at its 45 Annual General Meeting for the year ended December 31, 2014 held in Abuja on Wednesday, announced a whopping N196 billion income. The company’s revenue for the period under review stood at N196 billion from N212 billion recorded in 2013, representing a loss of 7.49 per cent. Profit before tax also dropped to N13.134 billion from N16.220 billion posted in the previous years

while its profit after taxation increased to N8.239 billion

The decision is based on Bilfinger’s strategic realignment from a construction company to an engineering and services group

in 2014 from N7.853 billion announced in 2013 representing 4.92 percent rise. The company offered a dividend of 270 kobo per ordinary share of 50 kobo each in the sum of N3.564 billion to its shareholders while its Shareholders’ funds rose to N26.095 billion in 2014 from N21.034 billion in 2013 while earning per share went down by 8.81 percent from N6.72 in 2013 to N6.13 in the year under consideration.

Africans able to drive economic integration, growth – CBN

By NAOMI UZOR

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he Central Bank of Nigeria (CBN), has said that Africans have the capacity to drive the continent’s economic integration, growth and development rather than relying entirely on foreign investors.

Commenting on the Dangote’s 2.5 million metric tonnes cement plant established recently in Ethiopia, the Governor of CBN, Godwin Emefiele, said the recent expansion drive of Alhaji Aliko Dangote confirms that Africans has the capacity to drive the continent’s economy integration, growth and development rather than depend almost entirely on foreign investors, especially at a time when the regional economy of sub-Saharan African and the economy of many of the constituents countries seem to be slowing down due to the impact of global shocks.

“I must commend Dangote cement for its expansion projects. The trust of the event is undeniably momentous for the entire Africa continent particularly as it underscores the importance of

fostering intra Africa investments.

Africa must first and foremost invest in Africa. We need to promote a symbolic and mutually beneficial flow of direct investment within the continent” he said.

He noted that the plant was undertaken at a cost of about $600 million and it is arguably the single largest investment in Ethiopia by an African entrepreneur, adding that, he believes that the investment will booster intra-regional trade, deepen financial market, create wealth, reduce poverty and unemployment and ultimately engender gross domestic product in Ethiopia with particular effects throughout the sub region.

For this, he said, Nigerians are very proud of Alhaji Dangote, an entrepreneur who is a patriotic African and a true ambassador of Nigeria.

The President/ Chief Executive, Dangote Group, Aliko Dangote, said the company’s decision to set up the multimillion dollar plant in Ethiopia was informed by the enabling environment the government of Ethiopia had in place for investors and that this favorable investment makes

Ethiopia attractive to foreign investors.

“The government has made remarkable progress and has superintended a period of significant and inclusive economic growth that has seen official Gross Domestic Product (GDP) growth rates of Ethiopia surpassing 10 per cent, over the past decade, with a projection of 10.6 per cent in 2015.”

“This makes Ethiopia the largest economy by GDP in East and Central Africa. The government is also investing massively in several largescale infrastructure projects, including construction of the continent’s largest hydropower dam. All these make Ethiopia a beautiful bride to investors” he said. He said he believes that manufacturing, and not trading, is the best way to grow an economy, and that apart from cement production, they are also investing substantially in other sectors of the economy such as agriculture, oil and gas refinery, fertilizer and petrochemicals and in all, they have 13 subsidiaries in Nigeria and are investing about $16 billion between now and 2018, in new projects and existing plants.

angote Cement Plc has set plans in motion to open N78.4 billion ($400 million) factory with a 2 million metric tonnes in Nepal, Asia before the next 30 months.

While awaiting all regulatory approvals required to start the construction of a cement factory in the south Asian nation, Aliko Dangote, says the company has received 90 per cent of the regulatory approvals to commence operation by end of 2017. “It’s going to be one of the first factories for us to build outside our comfort zone, outside Africa,” Dangote, who has never visited Nepal, will invest $400 million in the country to build a cement plant with a capacity of as much as 2 million metric tons. He’s also eyeing South America and surveying for limestone in Brazil, where he registered a company two years ago. Nepal’s government estimates reconstruction costs from April’s quake, which killed thousands, alone will exceed $10 billion, even before the country was hit by a separate 7.3 magnitude temblor last month. “It will be a major boost for them, especially with what happened,” Dangote said.

“They don’t produce cement at the moment, they import mainly from India.”

There is room for Dangote to move into Nepal, said Andy Gboka, a fund manager at Bellevue Asset Management AG, which manages more than $5 billion and holds Dangote Cement shares.

“There is not enough production capacity and unfortunately you saw what happened with the earthquake and the infrastructure that was damaged,” Gboka said by phone from Zurich. “Even though this is coming from a negative event, there is a strong growth story in the Nepal region.” The tycoon, with a net worth of $15.4 billion according to the Bloomberg Billionaires Index, has made the vast majority of his fortune in African cement production. He also has interests including sugar and more recently oil refineries in Nigeria.

Dangote’s charity gave $1 million to Nepal’s government after the deadly earthquakes.

He said he has made more than 20 billion naira ($100 million) of donations in more than two years, mainly in African countries such as Nigeria, Niger, Kenya, Tanzania and Ebola-hit nations in West Africa.

26 — Vanguard, MONDAY, JUNE 22, 2015

Corporate Finance

Stanbic IBTC to publish names of loan defaulters

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tanbic IBTC, the local unit of South Africa’s Standard Bank in response to directive of the apex bank, Central Bank of Nigeria (CBN) will make public list of loan defaulters.

Stanbic IBTC would be among the first banks to publish such a list after the regulator directed banks in April to go after nonperforming loans to forestall a repeat of a 2009 industry bailout that cost the government $4 billion.

The new plan requires banks to give bad debtors three months to square their accounts, following which they would be named in Nigerian media and barred from taking part in currency and government debt markets in Africa’s biggest economy.

An online publication quoted that Stanbic, in a statement said that in addition to publishing a list of defaulters by the end of August, it would also use legal and other means to recover non-performing loans.

LBSAA holds President’s dinner to fete alumni

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lumni of Lagos Business School (LBS) who have distinguished themselves in their chosen fields will be celebrated at the 21st President’s Dinner organised by the LBS Alumni Association (LBSAA), where high-level networking opportunities will be fostered.

The annual event, scheduled to hold on 27 June 2015 at the Eko Hotel and Suites, Victoria Island, Lagos is one of the biggest corporate and social events of LBS. Mr.WoleOshin,LBSAAPresident, said this year’s President’s Dinner would be attended by a good number of the institution’s alumni who have distinguished themselves in their chosen fields.

“The event would create a platform for high-level networking among icons of the Nigerian business community and highlight the School’s leading role in nurturing Nigeria’s business leaders,” he said.

According to Mr. Henry Onukwuba, Director, Alumni Relations, LBS, awards will be presented to deserving Nigerians and the best alumni class would also be honoured.

He said: “The event will be graced by distinguished professionals and captains of industry from all walks of life, some of them, products of the prestigious institution.”

GOOGLE DAY: From Left, Tolu Ogunkoya, Chief Executive Officer, MediaReach OMD; Juliet Chiazor, Country Manager, Google Global Services Nigeria Limited; and Patrick Gomes, Chief Digital Officer, Google; at ‘Google Day’; an event organized on brand marketing at OMD’s office in Lagos.

Lead Capital canvasses banking reforms to grow real estate market

By PETER EGWUATU

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he Chief Executive Officer of Lead Capital Plc, Prince Abimbola Olashore, has said that to unlock opportunities in Nigeria’s real estate market, the financial sector has to be reformed, fair banking practices have to be adopted and better supervision has to be focused on.

He explained that this will also stabilise prices in the long run and help to utilise the 17 million deficits in the real estate market which represents a huge opportunity.

Olashore, stated this during a paper presentation on “Unlocking the Opportunities in the Nigerian Residential Real Estate market: The Investor ’s Perspective” at a forum recently organised by Lekki Gardens Estate Investment in Lagos.

According to him, the opportunities inherent in the sector lies in the fact that there’s an increasing population growth in which more than 80 per cent of Nigerians live in settlements and demand for housing far exceeds the supply.

His words “Opportunities in the real estate financing can be seen from the increasing population growth, rapid urbanisation and the growth of the middle class have spurred demand for real

estate. With the level of housing at only 2 dwelling units per thousand people compared to a rate of 8-10

Opportunities in the real estate financing can be seen from the increasing population growth

dwelling units per thousand people as recommended by the United Nations. Nigeria has a population growth rate of 3 percent and a ruralurban migration rate of 5 per cent per annum. The rate of housing demand continues to exceed supply, presenting ample opportunities for growth and development”.

Viewing the investment perspective of the Real Estate, he portrayed Africa and the Emerging market as being field with opportunities for

healthy returns due to their increasing growth fundamentals. This is due to the fact that the Eurozone crisis has slowed down growth and weakened advanced economies from their strong position as an investment destination. This has made investors focus on promising markets, such as Africa, and the fact that Africa’s cities are experiencing an influx of residents in search of work and better standards of Living.

The Managing Director of FSDH Merchant Bank, Mr Rilwan Belo-Osagie, who spoke from the Banker ’s perspective on ‘Financing Real Estate deals’ stated that one of the peculiarities in the industry is that there is a large demand for housing in Nigeria and as such the Real Estate business is growing fast. “The key issue in financing real estate is achieving bankability, and dealing with weak value chains which ranges from property registration and taxes, Infrastructures, high interest rates demand, and access to long term finances.

Unless we get more mortgages in Nigeria, developing the residential real estate among other real estates will be difficult.”

While trying to unlock real estate opportunities from the media perspective, the Publisher of Business Day Paper, Mr Frank Aigbogun reiterated that more clarity is required on the part of those developing and buying houses, in order to understand the dynamics of sector, what drives it, and how it is compared with those abroad? According to him all these will aid reporting of the sector better .

Heritage Bank partners PMAN on biometric card scheme

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eritage Bank has announced its partnership support with the Performing Musicians Employers Association of Nigeria (PMAN) for the launch of a Biometrics Card Scheme for members of the music body.

The PMAN Biometrics Card Scheme, a flagship multi-purpose identity card project which was initiated to re-validate the association’s eminent status in the nation’s entertainment industry, is conceived as a starting point of an all-inclusive scheme to ensure significant levels of protection for Nigerian musicians’ commercial rights.

PMAN President, Pretty Okafor, explained that the Scheme is a product of a comprehensive assessment of the nation’s entertainment business landscape which shows that Nigerian musicians and their colleagues in the entertainment sector have been earning far below the commercial value of their works due to a variety of factors such as poor infrastructure and weak institutional and policy environment.

According to him, the Scheme would make it possible for PMAN to develop a sound database of genuine practitioners in the nation’s music business sector, thereby strengthening the anti-

piracy campaign.

Additionally, the card would serve as a debit ATM Card as well as avail members a CUG (Close User Group) platform to call their music business associates for a fixed monthly flat rate using the network service provider that is also partnering with PMAN in the Scheme. Heritage Bank’s Group Head of e-bank, Tobe Nnadozie, said the Bank’s decision to be part of the PMAN Biometrics Card Scheme is informed by its unwavering commitment to wealth creation, preservation and transfer in the entertainment sector.

“The entertainment sector has been identified as one of the biggest economic blocs in the country with potential to contribute hugely to the development of the national economy. Sadly, entertainment practitioners are being hampered from enjoying large chunks of what they deserve as income from their creative investments. As a bank that is wholly committed to the mantra of wealth creation and preservation, Heritage Bank is more than ready and willing to partner with PMAN in the task of sanitizing the environment so that entertainment practitioners can really flourish”.

Vanguard, MONDAY, JUNE 22, 2015 — 27

Corporate Finance

CAP posts N2.4bn profit, pays N595m dividend C

hemical and Allied Products, CAP Plc, a subsidiary of UAC of Nigeria Plc and manufacturer of Dulux paint, has posted a Profit Before Tax, PBT of N2.44 billion in its financial year ended December 31, 2014.

This shows a 17 per cent increase over the previous year. The company’s turnover also rose to N6.99 billion, indicating a growth of 13 per cent during the same period.

Based on the performance, the Board recommended a final dividend of N595 million, representing 85 kobo for every 50 kobo of ordinary share to shareholders on the register of members at the close of business on May 28th 2015. This, in addition to the Interim dividend of 150 kobo per share paid on November 19, 2015, brought the total dividend for 2014 financial year to N1.645 billion, representing 235 kobo per share.

The proposal received an overwhelmingly approval from the shareholders during the meeting.

Addressing shareholders at the Annual General Meeting, AGM, in Lagos, the Chairman, Mr Larry Ettah, said: “Businesses have continued to be buffeted by the usual challenges of poor

infrastructure and public services, insecurity, official corruption, multiple taxes, power supply shortfalls and volatile capital market.” He explained that power supply declined so precipitously in the country that public power became non-existent just as the currency devaluation heralded another round of sharp increases in the prices of inputs.

He stressed that coupled

with the elevated political risk due to the elections recently held in the country, investment dried up as consumer purchasing power remained weak.

Ettah further stated that the effects of these developments on the economy were low corporate revenues and margins and higher cost of doing business.

On the company’s plan for the future, he said, “As a

forward looking business, we will continue to seek and harness opportunities that ensure we remain relevant and create more value for you, our esteemed shareholders.

We will invest in cutting edge technology for paint manufacture that will enable your company to efficiently meet the needs of consumers, allowing them to express their colour preferences in the local variant of our flagship brand.”

WORKSHOP - From left: Managing Solicitor, Tayo Tiwo and Co. Mr. Tayo Tiwo; Director of Lands, Lagos State, Mr. Tunde Oyegbola; and Chief Executive Officer, SOFUNIX Investment and Communications Limited, Mr. Sola Oni, during a workshop on “Perfection of Titles in Nigeria: Issues and Resolutions” in Lagos.

Ecobank, Mastercard sign pact on payment solutions

By PETER EGWUATU

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cobank Transnational Inc. (“Ecobank”) has signed a landmark multi-country agreement with global payments technology company, MasterCard to bring MasterCard’s payment solutions to more than 32 sub-Saharan African markets. It is a move that is expected to increase the acceptance and adoption of electronic payments in Africa.

A culmination of the multi-country licensing agreement signed by MasterCard and Ecobank in January 2014, this initiative will see Ecobank issue MasterCard debit, prepaid, and credit cards to millions of its customers over the next 10 years. Ecobank will also roll out innovative MasterCard acceptance solutions designed to expand the number of merchant locations that accept MasterCard payment cards on the continent.

Albert Essien, Group Chief Executive Officer of Ecobank, says: “This collaboration with MasterCard will enable us to achieve our vision of contributing to the economic and financial integration and development

of the African continent by rolling out convenient, accessible and reliable financial products and services to our customers. Specifically, the initiative enables us to extend our MasterCard acquiring capabilities at thousands of merchants across Africa, grow our ecommerce acquiring business, and expand our service offerings to retail and commercial customers in Africa.”

Michael Miebach, President, Middle East and Africa at MasterCard, adds: “Bringing the benefits of electronic payments to markets across Africa and creating a world beyond cash is a primary focus for MasterCard. By collaborating with a leading pan-African financial institution such as the Ecobank Group with its extensive regional reach and established infrastructure, another successful step has been taken in ensuring access to safe, secure and convenient payments via MasterCard payment solutions.” As a result of the agreement, cardholders will now be able to access their funds at millions of automated teller machines in Africa and worldwide. They will also be able to pay for products and services in 210 countries and territories where MasterCard payment cards are accepted

today. The agreement will also see Ecobank roll out thousands of mobile point of sale devices to retailers in selected African countries, further boosting Ecobank’s current panAfrican network.

First millionaire emerges in Skye Bank reward scheme

A businessman residing in Kaduna, Kaduna State, Mukaila B. Hamza, has emerged the first winner of one million naira in Skye Bank’s ‘Reach for the Skye Millionaire Reward’ scheme.

Hamza, a former Mainstreet Bank account holder, now merged with Skye Bank, became the first winner of the scheme, following an electronic draw involving over 400,000 customers, during the unveiling of Skye Bank’s new retail banking project, tagged, ‘Retail Transformation and Growth’, R-TAG. A surprise congratulatory phone call was made to the winner by Managing Director/ Chief Executive Officer of the bank, Mr. Timothy Oguntayo, who urged him to invest his reward wisely and continue his loyalty to the bank.

Speaking earlier at the launch of the project in Lagos on Tuesday, June 9, 2015, Mr. Oguntayo, assured that the new business transformation project would bring about customized and needssatisfying financial solutions in a manner that will exceed the expectations of the customers.

In his words, “Our renewed drive and focus on retail banking is anchored on the premise of building a long lasting relationship with our customers based on trust as well as supporting the financial inclusion drive of the CBN so as to bring a lot more people into the financial system and the formal economy.”

For her part, the Executive Director, South South, South East and Retail Banking, Mrs. Ibiye Ekong stated that the ‘Reach for the Skye Millionaire Reward’ scheme was instituted by the bank to encourage savings culture amongst the mass market segment.

NSE , LSE partner to stage capital market road show in London

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he Nigerian Stock Exchange (NSE) has concluded arrangements to lead corporate finance experts, lawyers, capital market operators, regulators and companies keen to explore a London/Lagos dual listing, to an investor road show at London Stock Exchange Group (LSEG), as part of efforts aimed at promoting dual listing and showcasing the potential of quoted companies on the NSE to global markets.

Scheduled to be held on June 22, 2015, the event is in furtherance to the agreement signed in November 2014 between the NSE and LSEG to

strengthen cooperation and promote mutual development between the two exchanges. According to the CEO of the Nigerian Stock Exchange, Mr. Oscar N. Onyema, the event will bring together key market stakeholders to discuss opportunities for dual listing in the London and Nigerian capital markets. “It is an opportunity for engagement between the UK and Nigerian capital markets with a view to deepening domestic and regional markets; enhancing liquidity and identifying institutional and capacity building initiatives needed to develop both markets and create long term value for respective stakeholders.

28 — Vanguard, MONDAY, JUNE 22, 2015

Banking & Finance

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FCMB rewards more customers at second draw of millionaire promo

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nother set of 643 customers of First City Monument Bank (FCMB) Limited have been rewarded at the second draw of the Bank’s ongoing promotion tagged, ‘’FCMB Millionaire Promo.” The winners emerged at the electronic selection exercise which took place across the 3 Regions and 25 zones of the Bank nationwide on Wednesday, June 17, 2015. While 3 customers of the Bank were rewarded with the sum of N1 million each at the Regional draws held in Akure (Ondo state; Awka (Anambra state) and Abuja, a total of 640 others smiled home with LED televisions, generating sets, decoders, tablets, smart phones and other consolation prizes at the Zonal draws held in different parts of the country.

The FCMB Millionaire Promo, which commenced in February and run till July, is targeted at all segments of the society and for existing as well as potential savings account customers.

Fidelity Bank rewards loyal customers

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idelity Bank Plc has rewarded loyal customers with the sum of N52 million in the on-going Fidelity Loyalty Savings Scheme. A total of 106 customers were rewarded in this second batch; 80 beneficiaries received N500,000 “Xtra income” each, under Fidelity Personal Savings Scheme (FPSS) while 26 SWEETA account holders received N150,000 “School fees support” each.

The Fidelity Loyalty Savings Scheme is a special scheme designed to appreciate customers that had opened Fidelity Personal Savings Scheme and SWEETA accounts respectively. The accounts are interest-yielding which allows deposit of cash, cheques and dividend warrants. In addition, the FPSS and SWEETA account can be opened with any amount.

Another presentation will be held next month to a fresh set of beneficiaries of the scheme.

So, open and start saving today and you could win Extra income and School fees support with your FPSS and SWEETA account.

USTICE Olayinka Faji of the Federal High Court, Ibadan, on Friday, granted bail to five employees of three commercial banks involved in the N8 billion mutilated currency scam.

However, the court denied bail to 10 others, including three employees of the Central Bank of Nigeria (CBN).

The officials are Ademola Adewale of Wema Bank; Kehinde Fatokun, Olukunle Sijuade of First City Monument Bank and Ajuwon Bolade. The accused were arraigned by the Economic and Financial Crimes Commission (EFCC) on charges bordering on fraud, forgery and violation of the bank employees code of conduct.

The three CBN staff are Kolawole Babalola, Olaniran Adeola, and Togun Philip.

Others include, Isaq Akano, Ayodele Adeyemi, Oyebamiji Akeem, Ayodeji Aleshe and Ajiwe Adegoke, all of First Bank Plc and Oni Dolapo and Afolabi Olunike of Wema Bank.

Delivering his ruling on the bail applications made by the accused persons, Faji said that the prosecution failed to establish a strong case against the five for which they should be denied bail.

He said that while the court could grant or deny bail based on its discretion, bail applications could be denied if prosecution could prove that trial could be hampered if bail was granted. “The prosecution had not proven well enough that these five accused could attempt to jeopardise the case by concealing evidence or influencing witnesses.

“Although the offences,

Currency scam: Cour Courtt grants bail to 5 accused per sons persons herein, in my view are grave as it affects the economy, yet considering the proof of evidence before me, the prosecution has no strong case against the five,” he said.

Faji, thereafter, granted each of the five accused bail in the sum of N20 million with two sureties in like sum. The judge said that the sureties must be resident within the court’s jurisdiction and have landed property in Oyo State; in addition to possessing evidence of payment of three years tax. On the other accused

persons, Faji held that their statements to the police upon their arrest suggested some level of involvement in the offences against them.

“The amount of money found in their different bank accounts and the worth of property disclosed by them, which is above their proven income, suggest that there is a strong case against them.

“Although they complied with the EFCC when they were granted administrative bail, the same may not be said of them now that they know the gravity

LAUNCH: From left, Director Healthcare Programs, Bayer Pharma AG, Dr. Michael Heerde; Director, Health, Population and Nutrition office, USAID Nigeria, Dr. Nancy Lowenthal; Director Family Health, Ministry of Health, Dr. Balami Wapada and Senior Bayer Representative/Head, Bayer Healthcare West Central Africa, Mr. Amechi Nwachukwu at the launch of Microgynon Fe Oral Contraceptive in Abuja on June 18, 2015 at Ladi Kwale Hall, Sheraton Hotel, Abuja.

Access Bank’s UK subsidiary operating income up 37% Stories by PETER EGWUATU

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ccess Bank UK Limited, a wholly owned subsidiary of Access Bank Plc., which has just published its report and financial statements for the year ended December 31, 2014 recorded a growth in its operating income by 37 per cent.

The operating profit grew from 10.9-million Pounds in 2013 to 15-million pounds in 2014. The Bank’s profit before tax grew by an outstanding 138 per cent to £5-million. The latter reflects the growth in trade finance and also asset management activity by Access Private Bank. Assets under management for 2014 were £34-million, which is a year on year rise of 12.2 per cent, while total private bank customer

of what lies ahead,” he said.

He, therefore, denied them bail and ordered for accelerated trial.

The 22 bank officials are being prosecuted by the EFCC in seven different suits.

Three of the cases are before Justice Nathaniel AyoEmmanuel, while Faji is hearing four cases. Faji adjourned hearing in the four suits to June 26, July 1 and July 10 while the one involving the CBN trio and the three Wema Bank employees is Sept. 24 and Sept. 25.

funds were £46-million, a rise of 16 per cent on the previous year.

The Bank also saw a significant increase in net interest income of 94 per cent to £6.4-million as a result of the growth in loans to correspondent banks and customers. As The Access Bank UK’s Chief Executive Officer and Managing Director, Jamie Simmonds, highlights “this has been achieved while still operating within the moderate risk appetite set by the UK board”.

Further new products, such as UK fixed term deposits, were also introduced by the Bank in 2014.

Commenting on the figures, Jamie Simmonds adds: “Our second five-year plan began in 2014 and we achieved our aims and outperformed projections for the year. As at

31 December the Bank had a high capital adequacy ratio and liquid buffer assets significantly in excess of the minimum regulatory requirements. It is our intention that these will continue to be maintained at

Our achievements owe a great deal to the strong partnership that we have with our parent company, as evidenced by our joint support of the fourth Access Bank Day at the Guards Polo Club in Windsor.

satisfactory levels in the future.

“This has been a transformational year for the Bank as we have continued to grow the business based on the firm foundations that we have established and also diversify our income streams to ensure sustainable performance. We believe we have succeeded in the current financial climate where others have failed through our focus on establishing strong relationships with all our customers.

“Our achievements owe a great deal to the strong partnership that we have with our parent company, as evidenced by our joint support of the fourth Access Bank Day at the Guards Polo Club in Windsor.”

Access Bank Plc Group Managing Director Herbert Wigwe highlighted that the aim of the event at the Guards Polo Club is to raise further awareness of the issues and support required.

Vanguard, MONDAY, JUNE 22, 2015 — 29

Banking & Finance

Naira depreciates against major currencies T

HE Naira on Friday at the parallel market depreciated against three international currencies at the close of trading for the week.

A on Friday in Lagos showed that the Naira depreciated by N1 or 0.45 per cent against the dollar due to high demand. It sold for N221

against the dollar from the N220 it sold on Monday, June 15. The Naira also lost N27 to sell at N352 to the pound, representing 8.31 per cent depreciation from the N325 it traded on June 15.

Besides, the Naira against the euro went for N245 compared with the N238 it

sold on June 15, representing N7 or 2.97 per cent drop. The Naira against the dollar at Central Bank of Nigeria (CBN) official rate remained at N196.90, the rate since June 11.

But it fell by N7.96 or 2.61 per cent to the pound, selling for N313.31 from the N305.31

it sold on June 15. The currency also depreciated against the euro to sell for N224.58 compared with the N220.74 it traded on Monday.

A bureau de change operator, Mr Harrison Owoh said that the depreciation in all segments was due to a shortfall between demand and the foreign exchange available for sale. Owoh, who is the Managing Director of HJ Trust Investment Ltd., Lagos, said that a further shortfall in forex supply may lead to further depreciation.

VISIT - From left , Secretary to Akwa Ibom State Government, Mr. Etekamba Umoren, Regional Director, South South II, Skye Bank Plc, Mrs Emem Udosen; Governor of Akwa Ibom State, Mr. Emmanuel Udom; Group Managing Director/Chief Executive Officer, Skye Bank Plc, Mr. Timothy Oguntayo; and Executive Director, South South/Retail Banking, Skye Bank, Mrs Ibiye Ekong, during Skye Bank’s management’s visit to the Governor.

Citigroup to shift European retail banking base to Dublin C

ITIGROUP is planning to shift the head office of its European retail banking operation to Dublin from London to benefit from lower costs and capital requirements.

This week the bank wrote to clients to say the UK-based business, Citibank International Limited, which operates a small number of branches across some 20 European countries, would be taken over by Dublin-based Citibank Europe Plc. “From a strategic perspective for Citi, moving to a single pan-European bank is expected to reduce operational and regulatory complexity, capital requirements and cost,” the company told clients.

Reuters quoted analysts saying UK rules that require banks to hold a higher level

of cash in reserve than other European countries do was likely to be a factor behind the move but that they did not expect to see a stream of other banks moving their headquarters from the UK. A spokeswoman for the bank said the change in the retail bank’s legal domicile and principal regulatory base would not involve job cuts and that the leadership of the European retail operation would continue to be based in London.

“The primary reason (for the move) is simplification, mirroring Citi’s strategy of creating a simpler, safer, stronger institution,” she said.

Citigroup has been scaling back its retail operations in recent years and remains a small player in Europe.

Citibank International Ltd

employed 4,600 people at the end of last year, filings show. Citibank Europe Plc employed 4,300 and currently focuses on providing transaction services to financial services and corporate clients.

The spokeswoman denied that the decision to rebase in Dublin was influenced by the possibility of the UK leaving the European Union following the referendum on EU membership which is due to be held in the next two years.

Also, although Ireland has become a magnet for international financial institutions thanks to its low tax rate, the spokeswoman said the restructuring was not tax driven.

Regulatory capital Since the financial crisis regulators have increased the

amount of cash and government bonds banks must keep in reserve in case of financial storms.

Higher capital requirements mean less money to lend out or invest and consequently lower returns for a bank.

European Union countries apply the same international rules on capital requirements.

However, on top of the basic reserve requirements, regulators require some banks to hold additional capital as a buffer. The amount depends on the regulator’s perception of the bank’s systemic or business risks.

The UK’s banking industry is much larger in terms of its assets as a percentage of national GDP than that of other countries in Europe, which means bank failures could cause bigger economic ripples than elsewhere.

This has led the UK regulator to require banks to set aside more money than other European countries demand, analysts said.

Ecobank lends support to women entrepreneurs, partners WOWE festival

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n line with its corporate disposition to sustainable women empowerment, Ecobank Nigeria is partnering Women’s Entrepreneurship Day (WED) on the hosting of this year Women of West Africa Entrepreneurship (WOWe) Festival.

WOWe Festival 2015 with the theme ‘Vision to Reality’ slated for June 25 and 26 will provide the opportunity for female entrepreneurs and corporate professional women with entrepreneurial ambitions, to secure practical information on how to transform their businesses and realize their entrepreneurial ambitions.

The conference will also provide a high level networking platform that connects the most influential women entrepreneurs who will exchange ideas, address challenges, uncover new strategies and dialogue on issues relating to entrepreneurship.

CBN holds meeting with banks on forex rules

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ENTRAL Bank of Nigeria, CBN on Friday called a meeting with chief executives and treasurers of banks to discuss issues surrounding its policy on the foreign exchange market, multiple banking sources told Reuters.

The central bank imposed tight controls on the foreign exchange market in February to curb speculation on the naira and save its dwindling foreign reserves in Africa’s biggest economy. Before setting the restrictions, the central bank had been battling to prop up the naira after a sharp fall in the price of oil, Nigeria’s main export, which triggered a sell-off in assets by foreign investors.

The central bank also fixed the rate at which banks can buy dollars from oil companies.

Traders were upbeat on the outcome of the meeting which they claimed was long overdue to ease the tight control in the market and allow the local currency to find its real value.

C M Y K

30 — Vanguard, MONDAY, JUNE 22, 2015

Homes & Housing

NMRC to open 2015 Abuja housing show

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igerian Mortgage Refinance Company (NMRC) will kick-start the programme for this year’s Abuja Housing show.

The annual Abuja Housing show billed to take place from 6th to 8th July, 2015 is the biggest platform for exhibition of housing products in Abuja.

NMRC will open the event with a session tagged “Affordable Housing for Nigerians- what does this exactly mean?”

Notable experts drawn from various areas of the housing sector have been invited. Some of the organizations that will be part of the deliberation include: Director, Other Financial Institutions Department of the Central Bank of Nigeria (CBN); Director-General, National Pension Commission (PENCOM); National Insurance Corporation of Nigeria (NICON); Mortgage Bankers Association of Nigeria (MBAN) and; Real Estate Developers Association of Nigeria (REDAN).

Discussions will focus on land issues, delivery of standardized and affordable housing, building standard as well as the supply side of the housing equation (construction finance). Some state commissioners are expected to be part of the sessions. A communiqué will be issued at the end of the day.

Meanwhile, over 100 exhibitors and various stakeholders from every part of the country are set to attend the Abuja housing show which is expected to be declared open by the Vice President, Prof Yemi Osinbajo.

This year’s Abuja housing show is sponsored by NMRC, FMBN, Dangote Cement, Rock of Ages Limited, Nigerite, GoodHomes and Shelter Afrique, with Festus Adebayo as coordinator.

Abuja Housing show is an event of FESADEB communications Limited, producers of Housing Programme on AIT, NTA and Raypower. The event has become an ideal place for networking, meeting visitors and selling deals.

C M Y K

•Warren Buffet, one of the richest men in the world, lives in the same house he bought in 1958 for $31,500.

Nigeria among African countries with best property investment prospects Stories by YINKA KOLAWOLE, with agency report

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eal estate remains a booming opportunity for Africa-focused investors for good reasons.

The growth of cities creates a demand for increased volumes of high-quality commercial and residential real estate. Also, the rise of the urban middle class drives retail property development, particularly as modern shopping malls spread across the continent.

A growing number of multinational companies are searching for office space in the newly emerging cities. The rise of regional tech hubs and an expanding oil and gas sector creates job opportunity with no place to house the employees.

A survey by Venture Africa lists Nigeria among the topmost countries in the continent that offer the greatest investment opportunities in real estate.

Angola Angola is Africa’s fifth largest economy with Luanda and Huambo as its major cities.

Despite the recent construction of new properties across the both cities, primarily Luanda, the country suffers from a lack of good quality office and residential space. Surveys reveals that the majority of the near 300,000 square meters of office space brought to the market during 2014 – 2015 was already pre-leased or sold before officially opening.

Prices for office space, accordingly, are the highest in Africa at $150 per square metre per month in Luanda

nd (the 2 highest in Africa is comparatively $65 per square metre less). The retail market, although in its infancy, also provides a high return on investment with prices at $120 per square metre per month and a rapidly expanding middle class in Luanda.

Nigeria Nigeria is Africa’s largest economy with Lagos and Abuja as its major cities. You get mix reviews from developers in Lagos and Abuja on the effects

of recent construction. Capital has been poured extensively

As Africa’s sixth fastest growing economy, Nigeria is likely the most attractive market for retail property

into both cities. Yet the prices in both markets are consistently at two of the most expensive. Lagos office space rents for $85 per square metre per month while the Abuja office space, despite being in a market nearly 1/4 the size of Lagos, still rents for $72 per square per month.

As Africa’s sixth fastest growing economy (according to IMF projections 2015-2019), Nigeria is likely the most attractive market for retail property. Private equity funds have been active in this space in Nigeria for several years but prices remain high. It is home rd th to the 3 and 4 expensive market for retail space at $80 per square metre and $72 per square metre per month in Lagos and Abuja respectively.

An executive house with 4 bedrooms goes for $8,000 and $8,500 per month in Lagos and Abuja, while in Angola, the same property costs about $25,000.

Egypt Egypt is Africa’s third largest economy with Cairo, Alexandria and Giza as its major cities. Egypt is not Africa’s fastest growing economy – not even breaking the top 20 in Africa for the next five years. But its retail market is booming and looks to stay so in the near future. The drop in the retail sector during the Arab Spring hurt the growing sector back in 2013 through 2014.

Cairo retail space is renting for $100 per square metre per month. Office space rents for $35 per square metre per month in Cairo, making it one of top 15 expensive cities.

Firm begins work on 10,000 Abuja workers’ houses

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ock of Ages Properties limited, a member of (CHICASON) Group has started the construction of 10,000 housing units Estate at Lugbe South in the Federal Capital Territory (FCT).Chairman of the CHICASON Group, Chief Dr Chika Okafor, who disclosed this, said about 3,000 units of the housing development which are meant for civil servants and other interested individuals will be delivered before the end of year.

He assured all the subscribers that the houses will be ready before the second quarter of next year, based on what he termed the good the reputation of the CHICASON Group. Okafor further noted that the Trade Union Congress (TUC) is one of the major subscribers of the houses. Meanwhile, Executive director of CHICASON Group, Adike Chux, said the United Workers Housing Scheme is a housing development that would deliver 10,000 housing units in plot 301 and 302 of L22 Southern Lugbe of the FCT in the phase 5 FCT development.

Chux explained that the project is been sponsored by CHICASON Group and the developer is Rock of Ages, a subsidiary of the Group, while the other collaborators for the project include TUC, Federal Mortgage Bank of Nigeria (FMBN), Nigeria Mortgage Refinance company (NMRC), Trusts Bond

Mortgage Bank and other banks. He added that the subscribers of the project cut across all works of lives, including the staff of Nigeria Customs and ECOWAS. According to Chux, the houses are in 12 different house styles and affordable to subscribers. “The subscribers will make equity contributions depending on the house type referred; the apartment blocks ranges from 2 bedroom flats to 3 bedroom flats, and workers who are contributors to Pension and National Housing Fund automatically qualify to apply for the houses. Some of the facilities and social infrastructures the subscribers will enjoy are good road network, independent power supply, water that will be metered to various apartments, hospital, secondary school, primary school, banks, petrol stations, office complexes, motor service stations, shopping mall.

To achieve all this, CHICASON is working with Development Control of the FCDA to avoid the use of substandard materials.

The project is bigger than that of Gwarinpa and in the next six months, construction works would have gone far,” he stated.Also speaking, Professor Charles Ofoegbu, former Director General of NBBRI, said the United Housing Scheme for Nigeria workers falls in line with what he has been advocating for in the past 10 years in Nigeria’s housing policy.

Vanguard, MONDAY, JUNE 22, 2015 — 31

People in Business

•Dr. Akunne at work

•Modified Langstroth hive

•Some of the products

Apiculture'll solve health, unemployment problems - Dr. Akunne

By EBELE ORAKPO

D

r Chidi Akunne is

a Consultant Apiarist and senior lecturer in the Department of Zoology and Entomology Option, Nnamdi Azikiwe University. In this chat with Financial Vanguard in Awka recently, he spoke on the Modified Langstroth Hive, honey wine and other products, noting that honey can help provide the much needed employment as well as food security.

Excerpts:

The Beehive: According to Dr. Akunne, he and his friend, Chiegele Akpoke invented the Modified Langstroth Hive for beekeeping and honey production.

"The beehive has two sections - the lower or brood chamber and the upper or super chamber. The brood chamber is where the queen bee and young ones reside while the upper chamber or super is for honey production.

"The advantage the Modified Langstroth Hive has over others is that both chambers (brood and super) are on the same side, affording the super chamber more space to store honey.

"Through beekeeping or apiculture, we can have honey as our primary product apart from beeswax used for candle making, paint making, shoe polish, pharmaceutical and therapeutic purposes as well as food."

The advantage Modified Langstroth Hive has over others is that both chambers (brood and super) are on the same side, affording the super chamber more space to store honey

Tonic wine: "I also made honey tonic wine which is more medicinal than the table wine.

Other products are bee propolis which is even more medicinal than the honey people clamour for. So beekeeping/honey production is purely for economic empowerment especially for the youth and young entrepreneurs."

Job creation: "Today, we talk about unemployment so beekeeping/honey production is really a venture that people can engage in small scale to curb the problem of unemployment. It empowers the youths, even the women are involved.

Food security: "Honey is good food for everybody - the young and the old as well as for health purposes.

As we know, today in Nigeria, healthcare is not easily accessible but with honey, you can solve a lot of health problems.""

Challenges: "There are challenges and risks in all professions. But with beekeeping, the

•Dr. Chidi Akunne...with beekeeping, the number one challenge, bee sting, is beneficial.

number one challenge, bee sting, is beneficial.

Bee sting medicinal: "One cannot engage in beekeeping without bee stings but we have reduced it to the barest minimum.

And of course, bee sting is not detrimental, it is medicinal.

In one of my write-ups, I talked about using it to solve the problem of Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome and cancer because from records, bee venom has actually done wonders in these areas so bee sting is not bad, people use it to cure some

diseases.

"But for someone to be involved in beekeeping, you have to protect yourself.

There are bee suits, smoker used to calm the bees because the bees release pheromones. A pheromone is a chemical released by an animal and it changes the behaviour of another animal of the same species. In this case, bees. They are sometimes described as behaviour-altering agents.

"The pheromones tell other bees that there is danger and they start stinging, but once you are protected, you will not be afraid," said Akunne.

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32 — Vanguard, MONDAY, JUNE 22, 2015

Interview

By EMMA UJAH, Abuja Bureau Chief & EMMANUEL ELEBEKE

M

any Nigerians are looking up to the Federal Inland Revenue Service to bail the country out of the current revenue crisis, owing to the fall in oil revenue, what strategies have you put in place to raise your tax collection?

It is all about our common interest because we are all affected. If Nigeria does not have enough revenue, it would not be able to execute government programmes. But you know that the life line of the revenue source of this country is oil. If it does well, you would not know there is problem in all the other sectors.

But how do you do effective tax administration in the face of the present tax system? A good tax system is based on the law, the policy and the administration.

The last Minister of Finance had anticipated that the oil price would be on the declining end and suggested a list of new surcharges. They thought it would be sufficient to block the leakages and assist the budget deficit but that has not been realised. On our part, we keyed into it because we saw it as a veritable source towards addressing the declining revenue.

But we have not been able to collect. The reason is that Nigeria lacks the policy and law that support it. We are revenue administrators but we do not have that enabling law.

There are sources of revenue but what is needed is to understand what is driving the tax collection and remain focus.

Whatever we do have to be within the national Tax Policy. For us in FIRS, I can only improve on my limit. I have to follow the tax administration and can not influence the Minister of Finance.

The Minister had proposed a new VAT ( Value Added Tax) rate but the question is, are we prepared to implement this new rate? We are not because the power to do that lies with the executive as advised by the minister of Finance. I can only provide technical inputs. If we make all these policies become laws, it will help the economy.

We go to the National Assembly through the office of the Minister of Finance and Attorney General of the Federation, still the laws are not considered. That was what happened to the PIB, but we all know what PIB would have done for the economy. They have demonstrated the figures but three years on, the National Assembly is still on it. What we are doing now is to look at the laws as they exist today and see areas that can give us quick wins.

What are these “quick wins"?

We started off with the structure of the FIRS. Before now, we used to have the Tax Offices performing the functions of revenue collection and returns processing. We have the same Tax Offices doing audit work and we have the same Tax Offices doing debt management and at the same time doing tax payer education.

So, we felt that we had to restructure and allow the office to C M Y K

focus on education of tax payer, going out to bring in more tax payers and encourage them to keep books of account and not only that ensure that they bring in their returns when it is due as we are doing now. We free you of all other burdens. Let somebody else or group focus on auditing those companies. It is not a punitive step but a corrective step with a view to changing the system.

So, we are emphasising the need for engagement with tax payers because we can not do tax administration all by ourselves alone. We want to partner with tax payers and if they get it right, our job becomes easy and more focused. But we have not been promoting all these in the past.

The old way had not helped us.

We are segregating all the activities relating to audit and giving it to experts, those who really understand the language of accounting, those who understand the tax laws, coming together in what we call audit environment.

That will help us, improve transparency and accountability.

They can then give report to management from time to time, on a monthly basis what they are doing.

We have a group whose responsibility is debt management. There are huge debts out there uncollected, what we do now is that if a particular group failed to collect their debt we send a different group to go and collect them and all they will be doing is to pursue debts.

What we have done there is to create 10 regional debt management offices across the country. Their jobs will be to pursue every debtor in their region.

Are you saying you do not have all the tools needed to discharge your duties?

Yes, I will say we have not all but we are engaging relevant agencies of government. We were still talking to all of them. It was still work in progress when they ( last administration) were leaving.

Could that be why the Luxury items taxes regime has not yet started?

Yes, levy on private jets, for instance, was proposed but remember that when it comes to levy on luxury goods, we will not be the only one to collect them.

Customs, NCAA and FIRS will do some parts. It is a collective thing. For instance, customs will collect the surcharge on luxury goods being imported, NCAA will work on private jets but we needed to work together to agree on the basis of the revenue collection.

What is worrisome on that is using weight to determine how much anyone who has a private jet will pay.

But the question to ask is, for the fact that a man has brought a private jet for himself, is it right to levy N100 million on him? And is it weight that should determine how much he should pay? So, we engaged them on this. Many of them own platforms here but do not own jets. They use the platforms of foreign planes flying and they will register those private jets against their names and at the

Tax holidays require sanitisation — FIRS boss

The The dwindling dwindling oil oil revenue revenue across across the the globe globe has has left left the the Nigerian statewhere whereevery everyalternative alternativerevenue revenue Nigerian economy economy in in astate source source must must be be fully fully exploited. exploited. The The Federal Federal Inland Inland Revenue Revenue Service Service readily readily comes comes to to mind. mind. The The Acting Acting Executive Executive Chairman, Mr. Samuel Ogungbesan toldaateam teamfrom from Chairman, Ogugbesan told Vanguard Vanguardthat thathis hisorganisation organizationwas wasready readyto toplay playits itsrole rolebut but called for the enabling policies and legislations that could significantly shore up tax collection in the country. He also stressed the need to granted to companies to sanitise sanitise tax theholidays Tax Holiday granted to with pioneer status. companies with pioneer status.

Excerpts.

•Samuel Ogugbesan

We are bringing Presumptive Tax System very soon.

The idea is to enable us register every individual and businesses and determine how much they will pay

table. Tell me one man you know, who does not pay tax? But the first challenge is that we do not have centralised tax collection system.

So, it is difficult to say this man is not paying tax and I want to run after him. At a point we created a department called High Networth Individual Group in the office of the Chairman. But some members of the National Assembly whom we engaged came back to us and said 'we are not earning all the money you see against our names.' They said some of the money paid into their accounts were for constituency, accommodation and other allowances. At the end of the day, the facts were staring us in the face. We lack central tax

end, we discovered that they do not own even one private jet.

Some of them use those private jets for business purposes not for luxury after registering with the revenue agency and pay income taxes and also remit VAT on them.

So, there were a lot of issues with the administration. We were also to levy N15,000 on those flying Business Class. We thought that will start in July, but how ready are we without enabling laws.

There is this believe that big men do not pay tax, how true is this?

That is a general perception but you have to put your facts on the

•Samuel Ogugbesan

collection system in this country. That is not to say that Fiscal federalism is not okay. The states can be allowed to retain their revenue but we can work together under MoU and we help them do the collection. Constitution allows it, Canada also has Fiscal federalism, America has it. Let us work together.

But if you create silos in different states and leave the centre, we are exchanging information. But we need to capture every tax payer. When we say big men do not pay tax, we should realise that some countries have gone flat rate in tax collection. We do not want to rattle anybody or disrupt businesses because one single tax system may serve the purpose In fact, we are bringing Presumptive Tax System very soon. The idea is to enable us register every individual and

Vanguard, MONDAY, JUNE 22, 2015 — 33

Interview involved, as long as, they are on that platform. For us, it is a huge revenue potential if we are able to get it.

But you know, it is ICT that will drive it. ICT today is an expensive venture, but we are ready to go by it. By the time we do it, nobody will come to remind us that somebody is not paying tax.

In every country, the informal sector is the engine of growth but if you do not partner with them, you may not be able to access anything from them.

One good thing government did was to establish the Developmental Bank of Nigeria.

That bank is now giving out loans to individuals and cottage industries. You grant them loan and it comes with moratorium period. That is for the next eighteen months, you are not required to pay back at all. In addition to that, it is at a low rate of interest.

If government has done that for you, it becomes easier for the FIRS to walk in there and demand their books of account and file in the accounts and then collect their tax.

That is why I keep saying, we can not do it all alone without the people.

Taxation in every country is every one's responsibility. Nigerians should support us, the legal people, judiciary, National Assembly will be there, giving us information about people who should pay and those who should not pay. We need information, but imagine that a tax man is there and you see people doing business and refuse to pay tax from them.

businesses and determine how much they will pay. But first of all, we need to know who our tax payers are.

If a tax man does not know who his tax payer is, it is difficult to get them to pay So, we are getting it right now. We are developing tax identification platform, which we hope will bring everyone into the platform. Looking at the success recorded in Lagos, even though they do not have the law, they started with cobblers, shoe shiners, taxi drivers and brought them into the tax system. The amount may be too small and does not disturb their business but when you put them together, it gives you the critical factor, the critical mass you need.

Because they have the data on them now, when a shoe shiner suddenly buys a machine, with the central data system, he is upgraded because his data will be seen. That is what we are trying to do with every individual. We can’t do effective tax administration if we do not have a data base of all our tax payers.

I have already met with the CBN Governor and he was happy to work with us. We have a team right now at the federal level. We have only requested states to drive it at their own end but compliance is poor, no one is following. The implication is that, if we do not have a robust data base, there is no way we can do effective tax system.

We have asked the CBN Governor to mandate all banks to ensure that no individual or corporate entity is allowed to operate his account until they have a TIN. We are working with NIMC also, so that all information they have in their databank can be uploaded into our platform, irrespective of who is

There are people whose tax es are deducted by their employees but when they request for tax clearance they are not given, how are you working to make sure that workers' taxes deducted are remitted to you?

That is a very good one but I would not want you to see it from the perception that nothing is happening. Something is happening which tends to promote compliance. I can tell you that the level of compliance from last year to this year has improved.

For those of us in the federal civil service, we have the Integrated Personnel Payroll System, IPRS platform in the office of the Accountant General. It does the calculation of pay as you earn. All you need to do is to fill in your information. There is no civil servant who is on that platform that is not captured. We have about 64 agencies integrated into this system. The number grew from 24.

The idea is to make sure that all federal government parastatals key into that platform. So, what that does is that you do not even have any control over it. The MDAs themselves cannot do it, someone is doing it for them.

For those in the private sector, that is where the problems is. The banks do the deduction but often times, they do not remit correctly.

What is important to us is to ensure that they are in our data base. And with the kind of monitoring we are doing in the recent times, we are reaching out to them and mandating them to ensure that the money they have deducted gets into our accounts. If it is filed late, we impose penalty. At least we know them. The number of agents coming into the platform is

In fact right now, no fund stays longer than 24 hours in any bank.

What about the use of consultants?

They law says no revenue agency should engage consultants for tax administration. Assessment collection and accounting for it.

We use consultants here but for training and ICT. We use consultants to build capacity but not to raise revenue. We are the one that tax payers should see in the front. We need the knowledge, the capability to collect revenue and we have done this for two years. Now we have seen that we can do it on our own and so we do not need them any longer. Let them go back to the background and rest. If they have better ideas in the future, they can come back and sell to us. But it is only in those peripheral areas.

•Samuel Ogugbesan increasing, but we are saying if every individual can do his own thing, the better for us. Let everyone account for his tax by himself but let us agree. I think, every worker has a responsibility to report to us if his employer is not remitting his tax to us. That is why we are emphasising engagement and collaboration. We are sending our people out for tax enlightenment.

There will only be problem with us when your tax is remitted to us and we fail to issue the clearance to your employer.

How do you handle tax evaders We insist they must pay. We use all our debt management staff to

In every country, the informal sector is the engine of growth but if you do not partner with them, you may not be able to access anything from them get them to pay. We use banks. It is a tripartite arrangement. We told the banks, you are collecting revenue for us , it is a collective responsibility. This tax payer is not complying. He is owing us so much, can you place a lien on the account of that tax payer?

They do not have a choice, they will do it and it is happening. That is better than to say because you have not paid, let us go to court.

Why am I going to waste my time in the court? At the end of the day, when judgment is given, we are still coming to sit down together. So what we are doing on debt management right now is promoting compliance.

There is no sense in going to seal up businesses anymore.

You owe me so much. I am not going to kill your business. You need to remain in business so that we can continue to recruit our children and I need you to continue to contribute to the GDP, so tell me how you are going to pay. That is debt management today. There is no sense in going to seal up businesses anymore.

Let me see your cash flow projection and then I say ok this is how much you need for your expenses- for your business to continue to run but tell me you must have to pay some, then we sign an MoU,- you sign and I sign and then the bank signs and I have you make payments every month.

That is what modern tax administration that yields results does.

Tax payer service, before now we were doing it from the headquarters . We need the Tax Offices to do tax payers service- just help fill forms. Now we said no. let headquarters alone be responsible for developing technical materials that will go to the fields. At the Regional level, 10 Regional Officers throughout the country, let them be the ones that will be organising stakeholders engagement with associations, with trade groups, interface with our officers there to undertake tax enlightenment programmes. It is happening at the same time across the country.

No one needs to be told that this is a new reawakening that is going to change the way we do things and we are engaging more with tax payers- they can feel us now. For the communications companies, airlines, power companies, what we are doing now is to ensure that we take our money upfront. Why do we have to encourage you to hold back our money and hold it for sometime before remitting to us. We have told them and they have assured that they will cooperate with us.

Do you still have issues with banks holding bank your money for some period, do business with it before remitting to your accounts?

Those were delay matters. They collect this money, and because we allow them then, some of them were holding back. But we have sanitised that area and as at today they are reporting as at when due.

But it is still a problem at the state and local government levels?

The last government did a lot to sanitise these problems. States and local governments can no longer just wake up and put spikes on the road. There is a Bill, we will present to the new National Assembly, the document went through a lot of negotiations.

Some states that were authorised by the former Act to collect 13 taxes, suddenly expanded it to 69.

We have to sit down with them- the Ministerial Implementation Committeee- called their members and said, this is bad administration. What do we do? So they traded off some, so the ones on which they passed laws at their state level, we allowed them to keep.For others they also introduced those taxes or levis to help grow their IGR. What we have today, I can assure you is a single document that prescribes to each tier of government , the kind of taxes it can collect.

There are issues with Tax Holidays. If a Nigerian company buys an existing business, is such a company supposed to enjoy tax holidays through the pioneer status policy?

It is not just the pioneer status exemption. It is looking at the incentive regime in totality. I am an advocate of the government giving some level of incentives to attract investment into this country. Remember , we are not a capital exporting country but capital must flow into our country. Let me give you an example, those years when we had a lot of DFIs coming into the country, those capital inflows kept our foreign exchange in check. For those four or five years, we were moving between N140 and N150=$1. And we were celebrating . The moment those foreign investments stopped coming into the country, you can see the repercussion today.

There are other things that have contributed to the current foreign exchange situation but that is one critical point. What are we saying about incentives? There is a law. That law says this 73 sectors will enjoy pioneer incentives. It says investors are entitled to three years tax holiday and additional 1 year plus another one year, subject to satisfactory performance.

C M Y K

34 —Vanguard, MONDAY, JUNE 22, 2015

E-Commerce

M

ark Essien is the C h i e f Executive Officer of Nigeria’s largest online hotel booking portal, Hotels.ng. His company recently secured a $1.2 million investment, making it the only Nigerian e-commerce company to have 90 percent local equity stake. In this interview with JONAH NWOKPOKU, he spoke on how he managed the company to be able to attract such investment and how other start-ups can learn from his experience to also attract investors. Excerpts: Hotels.ng is gradually becoming a household name in the hotel industry barely two years since you started it, what really inspired you into this line of business?

Building the nexus of anything that involves the real world and the online and something like this is something that is basically facilitating people that are looking for hotel online. Before we came along this was not possible. People enter a town and virtually had to find someone to take them to a hotel. And they go there blindly but now that we have built this platform, anyone can go online and look at the pictures of the hotel and then decide to make the reservation because they already know that the rooms are available when they get down there. I think, observing that this opportunity exists in Nigeria to build something of this nature is what inspired us into this business.

Given your experience since you started, how would assess the Nigerian hospitality industry in relation to the emerging e-commerce sector?

The hospitality industry is worth about $3 billion annually in Nigeria alone. It is a very big industry. And generally you will see that when you compare e-commerce and hospitality, e-commerce is always the first online market to take off. We have seen it in South America, India and many other emerging markets and then the second one that usually takes off is the travel industry because travel is made much easier by pre-bookings and doing this in a way that you can compare prices. You can see comparing your experience of going to the airport to buy ticket to doing it online before you travel, there is a huge difference. This is the same thing with the hotel.

Instead of walking around three to four different hotels trying to figure out, it is very obvious that if you do this online, you end up with something much more comfortable for you. In that sense, as e-commerce develops, travel follows very quickly behind.

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How Nigerian start-ups can attract investors – Essien Your company recently secured an investment of $1.2 million, how were you able to do this in a landscape like Nigeria where there is scarce investible funds for start-ups?

And how do you intend to utilise this fund?

The investment we received is a good validation of the work we have done so far. Recently I was looking at the hot startups of 2014 and in the list we are the only one still alive. We have been able to stay alive through these turbulent two years and now we have been able to build a profitable company and now this investment. After the new Venture Capitals, partners are coming in numbers seeing what we have been able to do.

This is a vote of confidence.

This is because they believe that this business can go far.

The people coming in now, they are not just coming in with money; they are also coming in as partners in the business. They are coming as people with big funds. So, they may be giving us $1.2 million but they have $500 million in their fund and typically as the business expands, you don’t end up raising money once, as you have more capital needs, you are going to raise money again from your existing investors. This investment now is positioning us to expand locally and to also expand across West Africa. As we need more money to also expand across other parts of Africa, we

will be able to raise from either existing investors or new investors that like the growth that we are showing. So I believe that having this investment now has changed us from one of the start-ups to a viable business that is well positioned to take advantage of the opportunity that lie ahead within the continent.

Despite the challenges in the industry, you have been able to survive thus far, what have you done differently and what can other start-ups learn from that?

There is something I keep on preaching which is the fact that it is the market that drives your business. If there is no market, there is no business. If you bring out any product and it is wonderful but there is no market, there is nothing you can do to make that market sell but if there is a market, people

When you are building a start-up, the first thing you need to do is to make sure that you are in the right market

will buy even if it is a bad market. Anybody selling in the market will tell you that. So when you are building a startup, the first thing you need to do is to make sure that you are in the right market and if you see signs that you are not in the right market and that it is not moving, get out of that market and provide something that works. So, one of the things we did right and this was not because we are geniuses, is that we ventured into the right market from the beginning. We did not do something that was not working, we did something that was working and it was all about how do we make it work best? And it terms of making it work best, we are not the first.

I think there were one or two small players before we came and when we came we just dominated over them. And what did we do differently from them?

There are two things that are important. First, when you are starting a business, you have to tell your story, if you do that, people read about it, they know about you, they get a feeling of who you are so that you will be able to attract funding. That was what we were able to do fast. Right from the beginning, we did that because we focused on entering the right market, demonstrating to people that we can actually generate traction to what we are doing and then tell the story so that people out there that have money and are willing to invest can now start talking to you and get the details of how they can come in. So, doing things and staying quiet doesn’t help people grow, you have to tell your story so that people who may partner with you will know about you.

Operations

The second aspect is that you need to be good in operations.

Many people cannot forecast what is going to happen months down the road. So, they have a certain amount of money in the bank, now you know your money will last you for three months and you have a certain number of staff. Three months earlier, you have to cut your staff strength so that your three become six months and you have time to recover. But some people will wait until the last month before they will begin to consider reducing team size but then it will be too late. Such decision has to be made early. This is because, when you are in a corner, you do not win by exploring because even if you find what is working, you do not have money to exploit it. You do not have enough knowledge yet.

You have no run way. So you have to focus on what is important and once you do that, you will grow from there.

eTranzact holds forum to drive mobile banking innovations

e

Tranzact International PLC, has held a mobile banking Masterclass in London, England titled “The Future of Mobile Banking Masterclass”.

The event provided a platform to discuss new innovations in mobile banking targeted at making mobile banking more about the customer and launching new innovations to make the customer on boarding process easier.

Topics discussed ranged from how to improve the mobile banking experience for customers and innovations in providing support for customers, to unveiling eTranzact’s improvements in the on boarding process and mobile architecture of the mobile banking application.

Speaking about what the banks and their customers should begin to see immediately after the session, Chief Executive Officer, eTranzact International PLC Mr. Valentine Obi, said: “To us, every product we build is ultimately about the customer whether at the corporate or individual level, and we want to ensure that we are meeting their needs both locally and globally, pushing ourselves every day."

Amazon signs book sales deal with Penguin

A

mazon.com Inc. has signed a digital and print book deal with Penguin Random House LLC, the last of the five biggest publishers to reach an agreement with the Web retailer following a dispute last year over e-book sales.

The contract is for sales in the U.S. and U.K. The company gave no other terms. Stuart Applebaum, a spokesman for Penguin Random House, declined to comment beyond saying that the publisher is “still in business with Amazon.”

The agreement follows previous deals between Amazon and Harper Collins Publishers, Hachette Book Group, Macmillan Publishers and Simon & Schuster. Amazon and Hachette were locked in a public spat for much of 2014 because of disagreements over the price of digital books and shared revenue. Amazon has sought discounts, arguing that lower prices boost sale volumes and result in more total income.

Book publishers resisted the move, while authors opposed Amazon’s tactic of removing titles from its Web store during the dispute.

Vanguard, MONDAY, JUNE 22, 2015 — 35

Aviation

Aviation security audit: Why ICAO gave Nigeria pass mark

By LAWANI MIKAIRU & DANIEL ETEGHE

T

HE International Civil Aviation Organisation , ICAO, said Nigeria was given a pass mark after a thorough audit of the nation’s aviation industry which just ended because the audit team discovered there have been massive improvements in the security systems at the airports..

Disclosing this development to newsmen, leader of the team of the ICAO auditors, Mr. Steven Neu said that Nigeria performed excellently in the 9 days audit conducted on the nation’s aviation security system.

Neu noted that Nigeria scored a pass mark of 90 percent stressing that he was very impressed with the National Security Programme as there were very minimal “open items to be closed”.

He said, “Nigeria surpassed our expectations. We reviewed the 2008 audit before we commenced this exercise but we discovered there have been massive improvements in the security systems at the airports.” ‘’To Nigeria’s credit all the minimal open items were closed immediately. The audit was focussed on the eight critical elements”. he added.

According to him, Nigeria is one of the first countries in the world to go through the Universal Safety Audit Programme ,USAP, Continuous Monitoring Assessment

,CMA, Audit.

While applauding all the security agencies at the airports across the country, the likes of the Nigerian police airport command, DSS, Port Health Services, Air Force, Nigerian Drug Law enforcement Agency (NDLEA) and Quarantine services, The ICAO boss stressed that the USAP CMA activity had been completed while draft findings and recommendations would be provided to the Regulatory Authority.

“After 60 days ICAO will forward the USAP CMA audit report to Nigeria. In 30 days, Nigeria will submit its comments on the audit report if any. Within another 30 days, the country will submit to ICAO its Corrective Action Plan (CAP)” he said.

Meanwhile, Director General, Nigerian Civil Aviation Authority, (NCAA), Capt.

Muhtar Usman appreciated the auditors for conducting a very thorough ICAO audit.

T

HE contractor handling the construction of a new terminal at the Mallam Aminu Kano International Airport (MAKIA) Kano, Civil Engineering Construction Corporation ,CCECC, would complete the project on schedule and hand it over in March 2016. The permanent secretary in the ministry of aviation, Mrs. Binta Bello, has revealed Bello said this in Kano where she inspected projects at the airport. She said despite the seemingly slow pace of work on the terminal and other ones in other locations, there is no cause to

Review current multi designation for foreign carriers, Dana tells FG

T

he Managing Director of Dana Air, Jacky Hathiramani has urged the new government of President Muhammadu Buhari to review current multi designations approved for foreign carriers as most of them operate without reciprocity from their countries. This is just as he commend Buhari on his historic victory at the polls and eventual inauguration as the President.

According to Samuel Ogbogoro, Head Corporate Communication, Dana Air, Hathiramani said that President Buhari’s message of CHANGE resonates with the vision of Dana Air, and the yearnings of many in the aviation industry, given that President Buhari had promised to appoint technocrats to run the different aspects of the economy including the aviation sector.

Aviation unions oppose planned merger of ministries

VISIT - From right: Vice President, Prof Yemi Osinbajo; Mr. Oti Ikomi, Executive Vice-Chairman, Proton Energy and Mr. Adrian Mucalov, Director, Actis, UK during a courtesy visit on the Vice President by Proton Energy in Abuja.

New MAKIA terminal, others to be completed on schedule — BELLO

By LAWANI MIKAIRU

Capt. Usman revealed that he was happy that Nigeria performed better than she did in 2008 adding that the country would not rest on her oars but will continue to ensure that our air transport operation is secure and safe.

“The Nigerian Civil Aviation Authority, NCAA , will soon commence preparation for the ICAO’s Universal Safety Oversight Audit Programme (USOAP) coming up in November, later this year”.

“While the USAP takes cognisance of states’ security at the airports, the ultimate goal of USOAP is promoting global aviation safety through regular audits of safety oversight systems in all ICAO member states” Capt. Usman affirmed.

doubt the completion of the projects on schedule.

According to her “The project manager at MAKIA has assured me that he will hand over the job in March 2016. They will finish it; they have all the materials. If they, who are doing the work, say they will deliver by March, you have no course to doubt them.

“The only place where we had challenges was Lagos.

They had the initial challenge of site. And when they overcame the challenge, they mobilized to site and work is in progress. At other sites, there have been no problems” said Bello.

The China’s Exim Bank is funding the construction of

the international terminals located at Lagos, Port Harcourt, Abuja and Kano airports at the total cost of $500 million.

Meanwhile, like the situation at the Lagos and Port Harcourt airports, local contractors working on different projects at MAKIA had suspended work due to lack of funds.

Whichever project site the permanent secretary and her entourage visited, only a handful of artisans were seen idling away while their bosses were nowhere to be found.

Patmoz Nigeria Ltd which is in charge of building the airport’s fire station had suspended work on the project saying it had

exhausted what it got as mobilization fee. Although one of the company’s junior managers did not disclose the contract sum because “only my boss has the file containing the agreement”, it was gathered that the contractor received payment for the work around October 2014.

Similarly, Jameck West Africa, which constructs the general aviation terminal, said the project which is about 60 per cent completed had been suspended due to nonavailability of funds.

Responding, the permanent secretary assured that the contractors would be mobilized to sites when “there is availability of funds.”

“As soon as we are able to mobilize funds, we will call them back to sites. They said they have not been paid; we will look at it and once funds are available, we will pay them,” she said.

THE three leading unions in the Nigerian aviation industry have expressed their displeasure about the planned merger of the aviation agencies and the ministry of aviation with the ministry of transport.

The unions who made their position known insisted that the merger of the agencies and the ministry by the new administration was not a panacea to the myriad of problems facing the sector.

The unions; the National Union of Air Transport Employees, NUATE, the National Association of Aircraft Pilots and Engineers, NAAPE, and the Air Transport Services Senior Staff Association of Nigeria, ATSSSAN, in a joint statement signed byr Captain Tarmongu , Comrades Olayinka Abioye, and Aba Ocheme respectively, said that merging the ministry with transport would weaken its performance.

The unions recalled that the ministry was merged with the ministry of transport during the regime of former President Olusegun Obasanjo, but did not yield the expected result, which later led to its demerging by late President Umaru Yar’Adua. They insist that the merging of the two ministries was as a result of illadvise from some “cabals” in the aviation sector and advised President Buhari of the antics of the cabals.

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36 — Vanguard, MONDAY, JUNE 22, 2015

Vanguard, MONDAY, JUNE 22, 2015 — 37

38 — Vanguard, MONDAY, JUNE 22, 2015

"N12bn currency scam: N3.95b destroyed with acid, water, court told.”

THE NATION, June 12, 2015, p 1.

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he story went on to reveal that what started as an N8 billion scam had escalated to N12 billion scandal. Most probably, that might not even be the end of the story.

Most likely other discoveries or revelations will increase the amount and how long the economic sabotage had been going on within the banking system – with the Central Bank of Nigeria, CBN, as the epicenter of this financial war against Nigeria by a few ndividuals in the banking sector.

Last week’s column ended with the assertion that since money is regarded as the root of all evils, then banks must be the devil’s preferred workshop because nowhere else are individuals, like all of us, exposed to the temptation to “help” themselves to “wealth without work” (apologies Ghandi) as in banks. The accused revealed, so far, are junior staff. The amounts traced to them don’t add up to N8 billion. So that should

CBN and the N8bn scam (2) tell us something.

Among the questions we should be asking are the following. Who assigns staff to this sensitive task? What criteria are used in selecting those assigned? And, why are they not subject to continuous investigation?

Also, how on earth can junior staff of banks have so much in their accounts with any branch without anyone alerting the authorities?

Finally, were all these people such loners in their banks that none of their colleagues was aware of their stupendous wealth or was there an active conspiracy of silence in every branch of the banks involved?

Let us start with the first question – which should point to collusion by senior bank officials. It is a fact, easily demonstrated that all the staff of most organisations, private or public, eventually, get to know the assignments which are most and least lucrative.

Competition for the most lucrative becomes almost cut-throat. The senior staff responsible for posting invariably trade on this

knowledge. They post only those who will render “returns” from the illegal self-enrichment that would follow. Customs staff posted to the Murtala Mohammed Airport or Seme invariably live beyond their legitimate incomes. Posted out, they fight with everything at their disposal to return to the lucrative posts. The same is true of Police Officers, Navy Commanders etc.

There is absolutely no reason to think that the same

It is quite possible that for each of the junior staff so far apprehended there is a senior staff who arranged the posting

system of patronage does not operate in the banking sector. It is quite possible that for each of the junior staff so far apprehended there is a senior staff who arranged the posting knowing what would occur and benefiting from it. That would partly explain the huge gap between the N8-12 billion involved and the sum total of the assets found with the culprits at the moment.

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t the risk of being accused of trying to teach the prosecutors their jobs, one might want to suggest an approach often adopted by US prosecutors.

They offer to turn one or two of the accused to witnesses for the state in exchange for lighter sentences if they would provide vital information which will lead to the BIG people who probably master-minded the scam in the first place.

Looking at the staff involved, including drivers and security staff, it would appear that only one or two senior staff who could coordinate the activities of these people and remove the

security cover could have planned it. Those now in the net might be small “fish” – while those who received the lion’s share of the loot are planning their escape or have already fled Nigeria.

Finally, the conspiracy of silence, which made it possible for the scam to go on for so many years, must have involved some pay-offs to other staff members to buy their silence. Generally, it is almost impossible for three or four people to keep a secret of this magnitude for years. When we now have almost a dozen people involved, then they need a broad base of support from other staff in all the branches involved; and there must be an arrow-head ensuring that the conspiracy of silence is maintained. And, that can only mean regular pay-offs to other staff members in the branch.

At the moment, the EFCC is merely scratching the surface. They would not have solved the riddle until they can account for almost N7.5 billion.

Micro-Finance

NAMB goes incommunicado

Website inactive, President shuns press

By PROVIDENCE OBUH

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he National Association of Microfinance Banks (NAMB) is bedeviled by inactive website, to make matters worse is the President who do not pick calls or respond to Short Message Service (SMS).

The latest information on the website was posted on July 8, 2014 with headline: “CBN assures NAMB of support; MFBs veritable tool for nation building – CIBN President; NAMB elects new officers and another posted on April 18, 2013 with headline: “Executive secretary warns of the activities of fraudsters,” among others.

From indications, it is about one year since the association posted information on its website.

Vanguard findings show

that MfBs that are members of the association are even more active on their website than the mother association.

Example is LAPO Microfinance Bank (MfB) which latest post was in May and Accion MfB in February.

A research into the benefits of making websites active shows that: “The more engaged a website visitors are, the more time they spend on the site.

The more time they spend on the site, the more likely they are to feel connected to the brand. The more connected they feel to the brand the more they will register, tell their friends and keep coming back for more.

These things don’t work in a vacuum, they must weave together to work seamlessly.”

NAMB’s Vision

The association has a

vision to be the internationally respected industry representative of Nigerian Microfinance Banks by simulating innovative and sustainable microfinance practices that guarantee financial inclusion and wealth creation for the economically active poor

NAMB must wake up, website should never be static

To encourage more participation and patronage of this sub sector, it is imperative that the association ponder on these: “You can’t fix a leaky faucet if you don’t know where the drip is coming from, similarly, how can you fix a

website if you don’t know where your problems and your successes lie? Site analytics are critical if you want to increase conversations on your site.

Furthermore, most directors either don’t have the capabilities or aren’t using the key reports that provide crucial information in figuring out what is working for their site and what isn’t Analyze your site. Use the information. Make changes!

Websites should never be static. You can always tweak to find what peaks the interests of your users and they will always be happy when new information comes along.

Importance of website

According to Superanalyst.net, “The main reason it is important for businesses to have a website is how people are likely to find you. These days most people will go online and research products and companies before they make a purchase, if you don’t have a website you are missing out on all of potential business.

“A website is also

important because it helps you establish credibility as a business. There are actually still quite a few small businesses that don’t have a website and without one this is exactly what they will remain. If you don’t have a website that you can refer people to, potential customers are going to assume that you are a small time company that does not take their business seriously.

Once you establish this reputation it is going to be hard to make sales.

“Clearly there are still a lot of small businesses that do not have websites, there are various reasons for this but mostly it comes down to the belief that they are expensive.

It is rather surprising how much small business owners believe a website will cost them. In truth a website can be built for very little money and if you are on a tight budget you can even get free websites. Remember you don’t need a giant ten thousand page website for your business, just a simple site that tells people about your company and your products will be more than enough.

Vanguard, MONDAY, JUNE 22, 2015 — 39

Economy

Nigeria, South Africa, Egypt crash in ranking on ICT for business

BY EMEKA ANAETO

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frica’s three leading economies, Nigeria, South Africa and Egypt, have recorded massive drops in their ranking on the global Information and Communications Technology (ICT) development with regards to Networked Readiness Index (NRI). The index is managed by the World Economic Forum (WEF).

While Nigeria’s position dropped seven places to 119th, South Africa fell five places and now ranks 75th while Egypt dropped three places and now ranks 94th.

Though ranking below South Africa, Kenya’s position appears more impressive as it actually climbed six places to 86th position in the global record.

NRI is a crucial indicator of a country ’s ability to implement and take full advantage of ICTs in businesses, economic development and global competitiveness.

2015 edition of the Global Information Technology Report (GITR) is released at a time when many economies around the world are struggling to ensure that economic growth is equitable and provides benefits for their entire populations.

In the report, Managing Director of WEF, Espen Barth Eide, said ‘’advanced economies have not yet reached their full potential and they struggle with persistently high unemployment, rising inequalities, and fiscal challenges.

Emerging

markets and developing economies are facing stronger headwinds than before and need to adjust their development models to ensure economic growth and a more broad-based distribution of gains’’.

As a general-purpose technology, Eide explained

Advanced economies have not yet reached their full potential and they struggle with persistently high unemployment

that the impact of ICTs extends well beyond productivity gains and acts as a vector of social development and transformation by improving access to basic services, enhancing connectivity, and creating employment opportunities.

Published by the WEF in partnership with Cornell

University and INSEAD since 2001, GITR has measured the drivers of the ICT revolution using the NIR. For each of the 143 economies covered GITR series allows areas of priority to be identified to more fully leverage ICTs for development.

NIPC sets to review investment laws •Mrs. Uju Aisha Hassan Baba, Executive Secretary of NIPC

BY FAVOUR NNABUGWU

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he Nigeria Investment P r o m o t i o n Commission (NIPC) has began a review of the current investment laws with a view to making it more attractive to foreign investors while also strengthening NIPC’s institutional capacity to deliver on its statutory mandate. The affected laws are NIPC Act No 16 of 1995 and the draft Investment Promotion and Protection Agreement (IPPA).

An Inter-Ministerial Committee comprising officers of the International and Comparative Law Department as well as the Legal Drafting Department of the Federal Ministry of Justice, an officer from the Investment Department of the Federal Ministry of Industry, Trade and Investment and representatives of NIPC has been inaugurated for this purpose.

Executive Secretary of NIPC, Mrs. Uju Aisha

Hassan Baba stated that one of the key strategies being adopted to face the challenges in investment promotion is the sharpening of the promotional tools such as the IPPA which deals primarily with the admission, treatment and protection of foreign investment.

IPPAs usually cover investments by enterprises or individuals of one country in the territory of its treaty partner and ultimately boost the confidence of potential investors.

She explained that the need for review of the country’s IPPA and investment law was to develop a legal and institutional framework in line with current global investment and economic

trends that will enable direct and aggressive strategies for foreign investment inflows.

Nigeria, she said, “is in fierce competition with other developed and developing countries for global capital hence must develop specific promotional tools to boost its marketing strategies”.

Aisha Hassan Baba, served as Chairman of Nigeria’s Inter-Ministerial Committee on the negotiation of IPPAs and had prior to her appointment as the Executive Secretary of NIPC, fervently called for NIPC to drive the review process of the document as the Nation’s foremost investment promotion agency that relies on the incentives contained in the IPPAs.

40 — Vanguard, MONDAY, JUNE 22, 2015

Insurance

By FAVOUR NNABUGWU

IEI board targets stability, stronger capacity

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he interim board and management of International Energy Insurance (IEI) Plc says its focus is to bring stability and return the organisation to stronger capacity to be able to compete effectively and meet its obligations.

In this vein, the Board which assumed management of the Company about three weeks ago following the dissolution of the former board and the inauguration of the interim board by the National Insurance Commission (NAICOM) says it has embarked on restructuring of the company ’s operations, relationship with brokers as well as investment amortization.

Mohammed Ahmad, interim board chairman, who disclosed this during a brokers forum organised by the company in Lagos said the company is healthy and have the capacity to meet all its obligations. The intervention of NAICOM is to protect policyholders, investors and other stakeholders interests.

“Regulatory intervention was to ensure that individual interest does not destroy the institution, particularly that there were squabbles amongst board members.”

He stated that intervention does not amount to stress on the company, but could be for the interest of the industry to avoid laying a bad precedence.

Ahmad who has many years of experience as a regulator across the financial services industry including CBN, NDIC and Pensions where he retired as pioneer Director General of the National Pension Commission, says “We are not here to close IEI, but ensure that actions of the board does not undermine the institution.

“We gave you license not because of the money you paid but because you have promised to exhibit good character, integrity and good corporate governance.

“We are not here to stay long, but to finish our assignment within the specified time of first six months,” Ahmad stated.

He assured the brokers that the company will look at all claims outstanding and pay up within the shortest possible time. In another development, the company at the Brokers Forum, unveiled their online Marine Cargo product, meant to assist importers do business without hassles.

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HE National Insurance C o m m i s s i o n (NAICOM) has said that the media serves as a tool and a partner in fostering growth of the insurance sector.

Commissioner for Insurance, Mr. Fola Daniel, at the 8th seminar for Insurance Correspondents in Ilorin, Kwara State said the seminar, which began in 2009, has deepened the synergy between the sector and the media in the last eight years.

He said that the seminar helped a great deal to foster stronger relationship with the media who help educate the public on the importance of insurance.

“This forum has afforded us the opportunity to reassess ourselves and relationship with each other and in the process, explore new ways of forging stronger bonds of

Synergy with media deepens insurance awareness — NAICOM cooperation between members of the press and the commission.”

“Over the years, the Commission has had a sustained mutually beneficial relationship with the media.

For instance, we have not had serious reasons to disagree with reports about the Commission in the media.

The Commission shall continue to acknowledge and appreciate you in this regard,” he said.

The Insurance Commissioner also added that it has organised over 200 workshops and training programmes for insurance practitioners and journalists to expand their knowledge

about the sector.

According to him, “The objectives of the training include engendering better working relationship with media practitioners and public awareness; to address media on latest policies and developments and curb bad press among others,” he said.

On his part, Director General of the Nigerian Insurers Association, NIA, Mr Sunday Thomas acknowledged the support of the media though shared some observations which he hoped would change with time.

Thomas said, “Effective dissemination by the media of regulatory policies has ease

understanding and compliance by stakeholders; the media always act in defense of the policyholders to preserve their rights; agenda setting by the media has always put the regulator and the operators on their toes; cooperation with the media, creative thinking has increased in the insurance sector.” Thomas noted that the media always remind the industry of promises made, agenda set and polices introduced that have not been reneged, followed or implemented.

He admitted that the efforts of the media has assisted in stabilising the insurance industry

AGM - From left: Transcorp Ughelli Power Limited (TUPL) Directors Muhammed Risqua and Peter Hertog; CEO Adeoye Fadeyibi; Board Chairman Tony O. Elumelu, CON; Transcorp Plc Group President/CEO Emmanuel N. Nnorom; and TUPL Directors Sylvester Monye & Victor Osadolor during the 2nd Annual TUPL AGM

...Awaits 13 insurance companies’ response on accounts

By FAVOUR NNABUGWU

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HE National Insurance C o m m i s s i o n (NAICOM) says it is awaiting responses from 13 insurance companies over issues on their accounts before the Commission approves of them.

The regulatory body told journalists in Ilorin that 40 insurance companies have so far submitted their accounts to the Commission well ahead of the June 30th deadline out of which 13 are yet to get

back to NAICOM. Section 26(1) of the Insurance Act 2003 stipulates that every insurer shall not later than 30th June of each year submit to NAICOM, a balance sheet duly audited showing the financial position of the insurer and its subsidiaries at the close of the preceding year together with a copy of the relevant profit and loss account which the insurer is to present to its shareholders at its annual general meeting.

Director of Supervision of NAICOM, Mr Nicholas

Opara said that out of the 40, the Commission has approved 26 accounts of the companies while 13 of them are yet to get approval due to observations made by the Commission which the companies must correct before they get their accounts okayed and one is still under review by NAICOM. Opara said that NAICOM is waiting on the 13 companies to address the issues observed in their accounts and submit back for approval.

He said, “40 insurance

companies have already submitted their accounts to NAICOM. And out of the 40, 26 have been duly approved.

NAICOM made observations on 13 of them for corrections by the companies while one is still under review” In what seemed like a valedictory message from the Commissioner for Insurance, Mr Fola Daniel whose tenure ends in August this year, the insurance industry has huge potential that could match with South Africa insurance sector.

He thanked the media for the role they played in propagating insurance which has now become a vital sector in economic development of the country.

Vanguard, MONDAY, JUNE 22, 2015 — 41

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42 — Vanguard, MONDAY, JUNE 22, 2015

Tax Matters

VAT on services of banks and other financial institutions The Value Added Tax Act Cap V1 LFN 2004 (as amended) imposes a tax known as Value Added Tax (VAT) on taxable goods and services. Part 2 of the First Schedule to the Act only exempts services rendered by Community banks, Peoples bank and Mortgage institutions from VAT. Accordingly, all banks and financial institutions, except those exempted, are required to charge VAT on services rendered by them to their customers and account for same to the Federal Inland Revenue Service. This is in line with Section 2 of the Act, which stipulates that “the tax shall be charged and payable on the supply of all goods and services (in this Act referred to as “taxable goods and services”) other than those goods and services listed in the First Schedule to this Act. Definition of Bank and other Financial Institutions These are legal entities incorporated under the Companies and Allied Matters Act (CAMA) of 1990 and engage in banking and financial activities as defined by the Banks and other Financial Institutions Act (BOFIA), 1991. They are companies within the financial sector of the Nigerian economy and are either publicly quoted or private companies. Banks will ordinarily include commercial banks, merchant banks and development banks while other financial institutions will include; finance houses, insurance companies, reinsurance companies, stockbrokerage firms, investment companies and financial consultants.

VAT Liability Banks in particular, charge commission, fees, or other charges for services rendered to their customers. VAT calculations are expected to be based only on the charges made for services rendered. It should however, be noted that the focus of VAT is on the charges levied on customers for the consumption of services rendered by Banks.

The provision of loans and advances does not in itself constitute a vatable service but there are other ancillary services to the provision of bank loan/advances or bank overdrafts, which are vatable.

The documentation and perfection of loan/overdraft agreements are examples of such ancillary services and fees charged, which would attract VAT. The resultant

interest chargeable on the loans and overdraft is however not vatable.

Insurance companies’ brokers/agents earn commission, loss adjusters earn fees, surveyors earn fees, brokers earn commission and agents earn commission for various services rendered to the Insurance Companies.

The services which generated these income are vatable services, and even though the premium received on policies is not vatable as it represents cost of risk to the insured, the commission paid to brokers/agent from premium will attract VAT; with the burden of VAT being borne by the insurance company itself.

Vatable Services Rendered

by Financial Institutions In arriving at what constitutes vatable financial services, a distinction should be made between activities that constitute return on investment and consumption of services rendered by financial institutions. All charges arising from the services of banks and financial institutions will ordinarily attract VAT and they include among others, the following: Commisssions/fees charged on forex trading or remittance; Commission on turnover (COT), ledger fees etc; Legal and other fees chargeable on lease arrangements; Fees charged for advisory services e.g. mergers and acquisition, financial strategy counseling etc; Fees chargeable on public/ private issues; Debt conversion fees; Fees/commission on asset trading; Fees earned on fund management; Fees and commissions earned on letters of credit/ documentary collection to finance import/export; Commissions on sale of Bankdrafts/certified cheques;

Fees chargeable on stockbrokerage and trust services; Commissions paid to brokers, reinsurers, underwriters and other insurance agents by an insurer.

Services of Banks and Other Financial Institutions not Liable to VAT A simple criteria for determining whether a service is vatable or not is the identification of those activities that constitute return on investment as distinct from those that represent consumption of

Where computerization has been established and it is likely to skip these procedures, the FIRS should be notified of the system in operation and how it would take care of all procedures without leaving out anything uncaptured. services. The services of Banks and other Financial Institutions that will not attract VAT include: Premium on insurance policies; Interest on loans/advances and overdraft facilities; Interest on savings accounts; Interest on bank deposits; Dividends; Interbank placements; and Profit/gain on disposal of government securities.

VAT Registration and Rendition of Returns Banks and other Financial Institutions are taxable persons within the provisions of the VAT Act and all services rendered by them

are taxable with the exception of the services of Peoples Bank, Community Banks and Mortgage Institutions which are exempted by the VAT Act. These Banks and Other Financial Institutions are to register for tax with the relevant tax office and obtain TIN. VAT returns are to be made regularly to the relevant tax office within twenty one (21) days after the month of transaction.

Accounting Procedure and Records to be kept

by Banks The mode of operation in the banks does not permit the issuance of tax invoices to customers. The VAT charges therefore have to be reflected in the customers’ statements of accounts in order to enhance disclosure and easy verification by tax officers.

Banks and other Financial Institutions are required to adopt the following simple methods of recording their transactions for VAT purposes: (i) When any service is identified as vatable, internal entries are raised by the Bank for the cost of the service plus 5% VAT. (ii) The Bank is expected to debit the account of the customer accordingly with the cost of the service plus the 5% VAT charged. (iii) Credit the Income account of the Bank or Institution with the income element of the charge excluding the VAT (iv) Credit the FIRS VAT account in the particular Bank or Institution with the 5% VAT deducted from (ii) to arrive at (iii).

Section 16 subsection (b) provides that where input tax exceeds output tax, the taxpayer will be entitled to refund of the excess tax from the FIRS on production of such documents as the FIRS may, from time to time require. With regards to banks and other financial institutions, this is not applicable because of the provision of Section 17 of Value Added Tax Act on allowable input tax, which provides that input tax on any overhead, service, and general administration of any business which otherwise can be expended through the income statement (profit and loss accounts) shall not be allowed as a deduction from output tax.

It is a common knowledge that the bank and other Financial Institutions render services; they do not produce goods and therefore regarded as final consumer of those goods purchased or services rendered to them. In this connection, all input VAT payable in respect of assets purchased for use in the banks and other Financial

Institutions should be added to the cost of the assets on which capital allowances may be claimed. Similarly, all VAT payable in respect of services consumed by the bank should be regarded as part of normal operational expenses chargeable to Statement of Profit or Loss Account. Under no circumstance should input tax on such items be claimed or deducted from output tax collected. Banks and other Financial Institutions cannot claim or deduct any input tax suffered. The entire amount collected on behalf of the FIRS should be promptly remitted in whole as prescribed by the law.

The Central Bank The position of the Central bank with regards to VAT payment is not different from that of other banks in the system. The Central Bank performs nearly all the services listed in paragraph 4 above and also acts as banker to other banks. It is therefore expected that VAT would be charged on payments made to it by the banks for vatable services rendered to them.

This makes it necessary for the Central Bank to register for VAT purposes.

Offences and Penalties Banks and other Financial Institutions have obligations to fulfill under the VAT Act like other taxable or registered persons. Part V of the Act contains the list of offences and penalties to be imposed. These include among others: Failure to register within six (6) months of the existence of a bank; Failure to issue tax invoice (debit note showing amount of VAT collected in the case of banks); failure to charge and remit VAT collected; Failure to keep proper records and accounts; Rendition of incorrect or false returns.

For these offences, stringent penalties are imposed to check possible defaults.

Banks and other Financial Institutions are taxable persons within the provisions of the VAT Act and all their services are vatable except those specifically mentioned in the First Schedule. Bank officials are strongly advised to familiarize themselves with the provisions of the VAT Act. Whatever is peculiar to any Bank or Financial Institution in terms of procedures which has not been dealt with in this circular should be referred to the FIRS without delay.

Finally, where computerization has been established and it is likely to skip these procedures, the FIRS should be notified of the system in operation and how it would take care of all procedures without leaving out anything uncaptured.

Vanguard, MONDAY, JUNE 22, 2015 — 43

Advertising & Promotions

Por tland me trics ffor or e xperience centres, ortland metrics experience cust omer satisfaction customer Stories by PRINCEWILL EKWUJURU

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n Nigeria, corporate firms operating Experience Centres across the country employ some front-line agents committed to achieve ‘best in class’ customer service as defined by the JD Power survey, a tool used to measure customer satisfaction.

The JD Power idea focuses on defining and developing skills and behaviours that are required by agents in order to make interaction with customers effective, memorable and consistent as possible.

The first step was to develop a simple competency framework that summarised the important skills, knowledge and behaviour required to deliver the customer experience which included a range of performance standards, such as the JD Power criteria, used to evaluate customer satisfaction.

However, over the past decade or so customers have all become accustomed to dealing with experience centres – whether it is to query an electricity bill, order a cheque book or complain about a missing delivery.

They are part of the way we live today, and in many ways they represent a significant improvement over the ‘old’ way of doing things, providing a personal service at a time to suit us.

Millions have been invested in improving experience centre service levels and efficiency, through sophisticated technology, improved business processes and complex performance metrics.

However, experience centres often achieve low levels of customer satisfaction due to a

HANDOVER: Managing Director/Chief Executive Officer, Tilad Nigeria Ltd, Alhaji Tijani Oladosu (left) Representative of Auto Value Ltd. Dolapo Onayemi at the handing over of keys to 10 Shine Ray mini-buses to Auto Value Limited in Lagos. poor interaction between the experience centre staff and the customer. If we have been guilty of focusing too heavily on improving processes and systems and ignoring the (more complex) human factor.?

If this sounds familiar then there are lots to experience in the new centre commissioned

by Portland Paints and Products Nigeria Plc, recently, owners of the Sandtex brand of paints.

As the Sales and Marketing Manager, Mrs. Nnena AzukaOnwuka put it at the unveiling of Sandtex experience centre at

Ifako, Gbagada: “We do not sell paints, what we sell is customized colour services.

The experience center is not all about buying products, it’s more about you (Customers).”

She described the Center as a comfortable one-stop retail center where customers can access all products from the stable of Portland with expert colour advice at no extra cost.

Colours are available in over 15,000 in the Crown UK range and over 1,000 in the Sandtex range for immediate tinting.

Whatever the consumer choice

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tisalat Nigeria has called for entries for the 2015 Prize for Literature which is in its third edition. The Etisalat Prize for Literature is the first Pan African prize celebrating debut African writers of published fiction.

According to Matthew Willsher, Chief Executive Officer of Etisalat Nigeria, “the Etisalat Prize for Literature serves as a platform for the discovery of new creative writing talents out of the African continent.”

While highlighting the following, he said the success of the second year concluded earlier this year paved way for the third year.

NoViolet Bulawayo won the maiden edition of the Etisalat Prize for Literature with her novel, We Need New Names, while Songeziwe Mahlangu emerged winner of the second year of the prize with his novel, Penumbra. The Etisalat prize is designed to foster writing in Africa, bring exciting new African writers to the attention of a wider audience, and promote the reading culture.

The winner receives a cash prize of £15,000 in addition to a fellowship at the prestigious University of East Anglia under the mentorship of the awardwinning author, Professor Giles Foden.

Ikeja City Mall rewards customers

s part of activities to Embrace new media — ADVAN urges marketers Areward customers, Ikeja City Mall, ICM, has rewarded

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peakers at the Advertisers Association of Nigeria, ADVAN organized peer to peer learning workshop have counselled Nigerian marketers to consider the value of new media in their marketing efforts, as a means of new communications channel.

The speakers believed that as much as the social media is important, marketers should understand this and embrace the platforms for brand building, but not at the detriment of the traditional media as it is still relevant in the marketing space.

Onyekachi Onubogu,

Our ambassadors' reputation speaks volume - Airtel

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of colours, our experience colours can match it, she said.

The new Center takes the brands closer to the consumers, provider to full the need for satisfying perfect paint finish that come in textured, smooth, gloss, satin, matt and special effects.

Corroborating, the Managing Director, Mr. Femi Oguntade, represented by the Finance Manager, Mr. Jubril Shittu stated: “our experience center is a one-stop shop where you have all Sandtex products with five years guaranty.”

Litrature Award: Etisalat calls for entry

irtel Nigeria says the reputation of the five brand ambassadors comprising musicians, a comedian and an on-airpersonality speaks volume for the brand.

The selection which was arrived at after series of consultation presents the music legend, TuFace Idibia; rap artiste Phyno; reggae dancehall singer, Patoranking; a comedian, Akpororo and renowned On-AirPersonality, IK Osakioduwa as brand ambassadors.

Speaking on rational behind their selection, the Managing Director and Chief Executive Officer of Airtel Nigeria, Mr. Segun Ogunsanya, said that the selected ambassadors for the new Airtel brand; who are tagged Smart Icons are respected members of the society who have distinguished themselves in their respective

fields and as a result, have now become forces in the entertainment sector.

He said: “We have carefully selected ambassadors who embody the values, character and overall image inherent to the Airtel brand, therefore making them a perfect fit for further endearing Airtel to millions of Nigerians whilst strengthening the relationship we have with our customers.”

Ogunsanya also noted that the appointment of enterprising and talented Nigerians as brand ambassadors is in line with their commitment to delivering value and rewarding excellence.

He described the unveiling ceremony of the celebrities as further demonstration of the Telco’s commitment to support the arts, creativity and entertainment industry.

Executive Commercial Director, Promasidor Nigeria Limited, gave the advice during the ADVAN organized workshop titled: “The changing role of marketing in digital economy,” saying that the workshop is a platform provided by the Association for knowledge sharing with different experts on various subjects with the objective to build the marketing industry and marketing experts that will help grow Nigeria’s economy. He also observed that the world and every marketer needs to understand how to apply and use these tools in order to remain relevant in the marketing world.

According to him, “Nigeria is moving faster in terms of digitalization, use of social media and e-commerce.”

Whilst noting that making the platforms a fundamental part of the marketing mix at this time is crucial. This he stated will make advertisers become better in what they are practising as the world is fast changing and nobody knows it all.

its five premium shoppers with shopping voucher.

The initiative which aimed at extending hand of appreciation to their customer witness the winners make purchases from any store in the mall worth N10, 000. Speaking during the presentation of voucher, the Marketing Manager, ICM, Mr. Emmanuel Ositelu said that the rewarding their customers was part of activities line up by the mall to mark the special moment in the history of Nigeria.

“We commence this Democracy Day with a promo which started on Wednesday May, 20th to 28th May, 2015 and it required shoppers to spend up to or above the sum of 5,000 on a single purchase receipt to qualify for the raffle draw and stand a chance to win a shopping voucher of N10,000” “The winners of this promo are contacted through their phone numbers and on democracy day they are here to redeem their cash prize.

C M Y K

44 — Vanguard, MONDAY, JUNE 22, 2015 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

SALARY ARREARS:

What manner of bailout?

T

he Executive Governors of more states in the Federation recently, unabashedly admitted, that, all is not well with their finances; indeed it has become, sadly evident, that civil servants in some states are owed several months salary arrears.

The devastating impact of such experience on personal dignity, and self confidence will be appreciated by anyone who has suffered such deprivation; ultimately an abiding sense of responsibility and integrity may become compromised with rationalisation for self preservation, while the “opportunities” for unethical or corrupt enrichment may become identified as divine providence. Social Scientists may also argue that once a public servant crosses this Rubicon, other decisions involving public assets will be processed through the same prism of self interest rather than public service.

Consequently, even when the period of adversity is over, the once dedicated and honest civil servant will still become hooked on a predatory habit on their fellow countrymen!

Indeed, the spirit of genuine and undiluted dedication to public good, was probably extinguished when distinguished and dedicated civil servants, were notified of their summary dismissal from service, without fair hearing on radio and TV in January 1975, by the presiding

Military Junta.

Thereafter, the civil service became an unsafe haven to pursue a career, as one’s future could clearly be jeopardized without the protection of extant procedural rules that seemingly guaranteed job security, if one performed their duties diligently.

Expectedly therefore, the erstwhile uncommon incidents of corrupt enrichment in public service soon gave way to what has become a concerted looting cult, in the guise of taking personal responsibility to safeguard one’s future, rather than endure the uncertain prospect of honorable retirement with pension.

Furthermore, civil servants also recognized that the rapid inflationary trend instigated by serial Naira devaluations between 1985 and thereafter, reduced the once life sustaining pension payments to monkey nuts! In this event, public servants needed no persuasion to ensure they put themselves first before the people they served.

Thus, it is possible that the spirit of I before state or country in public service may have become recharged throughout several states in the country by the current inability of several states to pay staff salaries. Certainly, under such circumstances, if the opportunity presents itself to collude and clandestinely dispose of expensive government equipment and machinery for self enrichment,

there would be many converts who would streamline the process.

Regrettably, such anti-social coup de tat, will be rationalised as self preservation and or a divine opportunity presented in answer to ardent prayers.

Last week, a multifaceted Governors’ Forum, reportedly approached President Buhari, with a beggars’ bowl for funds to enable them meet their salary obligations. It is unclear how much each State requires, but what is certain, however, is that the federal government currently has no substantial reserves to dip into; besides, the completion of several critical federal

Increase in money supply will fuel inflation, particularly when CBN appears eternally preoccupied with irreconcilable challenge of surplus Naira in the system

support banks during the financial crisis in 2008-9; that process, despite its inflationary collateral, incidentally required over N5 trillion of fresh Naira supply to buy out those toxic debts that allegedly threatened the financial market and by extension the economy.

Some Nigerians may claim that what is good for the goose is also good for the gander; instructively however, most States may have very modest quality assets to pawn for the tens of billions of Naira that they may require as ‘temporary’ bailout to keep afloat. In any event the CBN would not be expected to provide such bailouts with zero interest rate.

Eventually, the applicable cost of funds may mirror the pattern of other CBN interventions which carry about 9 per cent rate of interest; curiously, the disbursing bank would earn the lion share of 7 per cent while the CBN’s return on its clearly inflationary investment will make up the balance 2 per cent.

Nevertheless, it is pertinent to also ask how the CBN sources its seemingly inexhaustible supply of funds, especially when most of the funds provided to AMCON still remain outstanding. Well, the truth is that the CBN has the sole authority to print money, and so far, there is no strict limit to how much cash it can release into the system at anytime.

What is however, clear is that such increase in money supply will fuel inflation, particularly when CBN appears eternally preoccupied already with the irreconcilable challenge of surplus Naira in the system.

projects is also challenged by paucity of funds.

Nevertheless, although the 2015 budget already accommodates about N1tn deficit, it is more probable that over N2tn may have to be borrowed with oppressive interest rates between 12-17 per cent to fund the modest N4.5 trillion budget and fuel subsidy payments.

So, where will Buhari get the additional funds to bail out the States and also remediate those critical infrastructural deficits that urgently cry out for attention on the federal level, particularly in the areas of Education, Health and Transportation. Regrettably, rather than deploy the modest proceeds of the Excess Crude Account directly to critical infrastructure, these funds were stashed away as idle deposits and then gradually, simply whittled down, as recurrent consumption expenditure.

Indeed, despite the prevailing high interest rates, it may be difficult for those States with already high indebtedness to source funds from Commercial Banks, if these States do not have a realistic repayment plan, particularly with reduced monthly allocations caused by the crash in oil prices.

Alarmingly, internally generated revenue in some States remains well below 10 per cent of total budget, so how will such States pay back additional loans, especially when gestation for new initiatives on internal revenue generation take considerable time to harvest?

However, as usual, CBN may be called to the rescue with bailout funds, similar to funds which were created to

Business & Economy

Shale fallout torments Nigeria as flagship oil at decade-low T

HE shale boom that’s reduced U.S. dependence on overseas crude is reverberating in Nigeria as it cuts the pricing for its flagship grade to the lowest in a decade.

The country, part of the Organisation of Petroleum Exporting Countries, will sell July supplies of its Bonny Light crude at 23 cents more than Dated Brent, according to an e-mailed statement from Nigerian National Petroleum Corp. That’s the smallest differential since 2005 and compares with a 50 cent premium in June and $2.55 a year earlier.

Surging output from U.S. shale formations contributed to a market glut that drove crude down almost 50 percent last C M Y K

year, roiling global markets as producer nations lost revenue and foreign-exchange reserves.

While oil has pared losses this year, prices are still below what some producers including Nigeria and other OPEC members need to balance their budgets, data from the International Monetary Fund and ING Bank NV show.

“Nigeria has no choice but to cut their price differential to fight for market share,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “The U.S. was its key oil buyer in the past but imports have been shrinking with more shale output in an already oversupplied market.”

The slump in prices last year forced authorities in Nigeria,

which relies on oil for about 70 percent of its income, to scale back budgeted spending and devalue the naira. The nation’s former finance minister, Ngozi Okonjo-Iweala, said earlier this month that her successor will face a “difficult” year because of plunging crude revenues.

Brent fell 69 cents to $63.57 at 10:34 a.m. local time on the London-based ICE Futures Europe exchange.

Horizontal drilling and hydraulic fracturing, or fracking, that unlocked supplies in shale formations in North Dakota, Texas and other states has boosted U.S. output to the highest in more than three decades. That’s forced overseas producers, whose exports to the world’s biggest oil consumer are shrinking, to find new markets for their crude.

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