financial vanguard 30th july

JULY 30 , 2012

Customers accuse banks of unilateral application of charges *CBN bans charges on inter-account transactions, returned cheques

By BABAJIDE KOMOLAFE, LAZARUS IBEABUCHI, AHMED IBRAHIM & WILLIAM JIMOH

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ustomers have accused banks of unilaterally applying charges on their accounts contrary to the directive of the Central Bank of Nigeria (CBN).

Meanwhile, the apex bank, in the recently released exposure draft on the Revised Guide to Bank Charges, has banned banks from charging customers for transactions between account with same ownership and in the same bank.

It also banned charging of Commission on Turnover (CoT) on returned cheques, as well as charges for account reactivation and re-opening.

Vanguard investigations revealed that most banks introduce new charges and

176.15

+2.10

2,335.00

+19.00

22.54

+0.04

CURRENCY BUYING CFA KRONER EURO POUNDS RIYAL SDR FRANC DOLLAR WAUA YEN

0.2674 25.5246 189.8648 242.3401 41.2885 232.9723 158.0645 154.84 231.6635 1.9816 RENMINBI 24.2512

105.89

+0.63

89.48

+0.09

CENTRAL

SELLING

0.2774 25.6071 190.4779 243.1227 41.4218 233.7246 158.5749 155.34 232.4116 1.988 24.33

0.2874 25.6895 191.091 243.9052 41.5551 234.4769 159.0853 155.84 233.1596 1.9944 24.4087

CBN Exchange rate as at 27/07/2012

apply them without notifying their customers or seeking their consent.

Bank customers confirmed this to Vanguard and expressed their dissatisfaction. “They just charge me without explanation. I am fed up with them”, said Mrs Adeoti Damilola, an account holder with a bank with headquarters on Akin

Adesola Street, Victoria Island. “For instance, I am billed N200 on the counter charges and N5 per ATM usage. I am also charged on SMS alert messages. Some of these services are free in other banks. I feel bad because I put my money in the bank for them to save, not for them to use for their own purpose. I save money

Daily movement in Nigeria’s foreign Reserves Date

Gross

Liquid

Blocked

7/25/2012 7/24/2012 7/23/2012 7/20/2012 7/19/2012 7/18/2012 7/17/2012 7/16/2012 7/13/2012 7/12/2012 7/11/2012 7/10/2012 7/9/2012 7/6/2012 7/5/2012 7/4/2012 7/3/2012 7/2/2012 6/29/2012 6/28/2012 6/27/2012 6/26/2012 6/25/2012 6/22/2012 6/21/2012 6/20/2012 6/19/2012 6/18/2012 6/15/2012 6/14/2012 6/13/2012

36,403,703,249 36,403,418,310 36,391,121,323 36,365,654,316 36,371,416,240 36,379,100,008 36,420,992,370 36,418,686,770 36,429,710,135 36,450,568,264 36,479,564,300 36,497,704,064 36,508,584,087 36,545,176,505 36,571,697,672 36,529,665,029 36,566,608,821 36,602,741,234 36,718,909,292 36,768,298,167 36,829,232,311 36,886,648,983 36,931,189,425 37,076,904,406 37,136,812,354 37,190,196,510 37,242,250,788 37,276,792,515 37,461,761,514 37,550,571,225 37,591,813,395

35,037,009,683 35,035,992,394 35,022,869,752 34,994,881,189 34,999,638,681 35,006,487,430 35,047,470,798 35,044,778,925 35,054,684,830 35,075,075,141 35,103,634,805 35,120,780,500 35,131,302,305 35,165,982,517 35,191,863,856 35,150,080,184 35,187,500,219 35,224,185,853 35,342,121,916 35,391,994,830 35,453,077,062 35,510,737,613 35,555,551,182 35,702,334,796 35,762,497,019 35,816,409,349 35,868,886,243 35,903,875,267 36,089,263,928 36,177,946,615 36,218,871,756

1,366,693,567 1,367,425,916 1,368,251,571 1,370,773,128 1,371,777,558 1,372,612,577 1,373,521,572 1,373,907,845 1,375,025,305 1,375,493,122 1,375,929,495 1,376,923,563 1,377,281,782 1,379,193,988 1,379,833,816 1,379,584,844 1,379,108,602 1,378,555,381 1,376,787,376 1,376,303,337 1,376,155,249 1,375,911,370 1,375,638,243 1,374,569,609 1,374,315,335 1,373,787,160 1,373,364,544 1,372,917,248 1,372,497,587 1,372,624,611 1,372,941,639

Source: CBN

%

3.76% 3.76% 3.76% 3.77% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.78% 3.77% 3.75% 3.75% 3.74% 3.74% 3.73% 3.71% 3.71% 3.70% 3.69% 3.69% 3.67% 3.66% 3.66%

for them to be giving me interest, meanwhile, they deduct my money at will,” she said.

“I am not pleased with their charges,” said Kayode, an account holder with a bank with headquarters on Danmole Street, Victoria Island.

“Most of their charges are nothing to write home about. Sometimes, they over-charge me. Not quite long ago, I was double charged/debited on a single transaction. Honestly, I am not okay with the system and something should be done fast. It will be good if the CBN intervenes on the issue,” he stated.

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wo other customers of the same bank, Chieji Kingsley and Okoye Justina, condemned the charges of the bank as outrageous, saying that they were not pre-informed before charges were deducted from their account.

“The bank’s billing rate is outrageous. I wish they will stop billing us and allow us enjoy saving our money with them,” Kingsley said.

“There are many instances where they deduct little money from my account without due notification. I feel bad especially when I see that these charges are uncalled for. For instance, recently, I noticed that some money has been deducted from my account without my notification,” Justina added.

Kolawole, customer of a bank with headquarters on Ajose Adeogun Street, Victoria Island, said: “Initially, I was not really concerned about the rate they charged. But what I have discovered is that every month, I always receive alert that N100 or N50 is being deducted from my account and they will notify me that it is from the headquarters. I also observe that each time money is paid into my Continues on page 18 C M Y K

18 — Vanguard, MONDAY, JULY 30, 2012

Cover Story

Youth restiveness and unemployment in Nigeria: The way out (2) • Exuberance: Very often,

Customers accuse banks of unilateral application of charges Continued from page 17 account; it will reduce instead of increasing. Though I cannot say the specific amount, sometimes I feel upset because one does not expect such things. I have asked them severally but what they say is that it is from the headquarters.”

Mrs. Ugonma Anyanwu also confirmed that her bank does not notify her before applying charges. It is a polite way of stealing,” she said.

Mr. Jay Johnson narrated a recent experience on unilateral deductions of charges from his account. He said: “There was a time money was paid into my account. I noticed deduction of N200 and when I asked, the bank told me it was for alert.

Another time, I was having N700 left in my account, I was sent N10, 000 later. But to my surprise, I saw alert of N10, 300. Meaning the bank had withdrawn N400 without any reason. And just recently, my balance was N600, when I received a new alert, I discovered my balance was N300.”

Amusa Risikatu, an account holder with a bank with headquarters on Marina, Lagos Island, said she is charged any time she uses her cheque. “I feel bad whenever I notice that money has been deducted from my account. I have complained severally but to no avail".

Another customer of the bank, Anjorin Taiwo Mayowa, said: “For no reason, they deduct money every month. I feel bad because of the way they deduct the money without notice since I was not pre-informed about the terms and conditions of the C M Y K

transaction,” he said.

Vanguard investigations also revealed that most of the charges unilaterally introduced by banks are invented by the banks and are not captured by the apex bank’s Guide to Bank charges. These include, Salary Handling fee, Account Maintenance fee, interbranch and transaction fee.

Deputy Director, Financial System Stability, CBN, Markus Zacharia, however, maintained that: “Banks are required to apprise customers of charges before they are implemented.”

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ielding questions from journalists at the 308th Bankers’ Committee meeting in Abuja earlier this month, he said the exposure draft on the Revised Guide to Bank

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Banks are required to apprise customers of charges before they are implemented

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Charges released by the apex bank, is a review of the mandate between the banks and the customers on what they are supposed to be charged and when that contract is made, there is the need to be bound by such charges.”

“The CBN feels that this new guideline would enable bank customers to know ahead what they are going to be charged to avoid any extra or unnecessary charges that are not in the contract that they

entered into with the financial institutions.”

Among other things, the new Guide, according to the CBN, “is to enhance flexibility, transparency, and competition in the guided deregulated Nigerian economy.

“Where a charge is stipulated as 'negotiable', banks are required to appropriately draw the attention of their customers to it upon which the two parties should mutually agree on the applicable charge.

Although the Guide provides for charges on various products and services of banks, it is not exhaustive.

Banks are mandated to present any new product, services and charge(s) not covered by this Guide to the Central Bank for prior approval,” said the CBN. Under the new guide, the CBN banned banks from charging custormers for; transactions between account with same name in the same bank; Savings Domiciliary Account; Returned cheques; foreign exchange purchases from customers; Cash lodgement into domiciliary account.

The Guide also reduced the maximum charge for CoT to N3 per mile (N1000) from N5 per mile. It also makes CoT charge negotiable between the bank and the customer. The CBN also pegged maximum charge of N5 for SMS alert per transaction.

Under the new Guide, banks can charge up to N200 for cheque leaf obtained on the counter. It also allow banks to charge customers, who want to borrow, for credit reference reports obtained from credit bureaus, but banks are to bear the cost of quarterly monitoring of credit by credit bureau.

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·Unemployment: Unemployment is a hydraheaded monster which exists among the youth in all developing countries. The unemployment rate in Nigeria was last reported at 23.9 per cent in 2011. The National Bureau of Statistics (NBS) has put the figure of unemployed Nigerians in the first half of the year at 23.9 per cent, up from 21.1 per cent in 2010 and 19.7 per cent in 2009.

Minister for Agriculture, Dr. Akinwumi Adesina noted that Nigeria’s unemployment rate is spiraling upwards, growing at 11 per cent yearly. According to him: “Youth unemployment rate is over 50 per cent. Our unemployment rate is spiralling, driven by the wave of four million young people entering the workforce every year with only a small fraction able to find formal employment.

The rising tide of unemployment and the fear of a bleak future among the youth in African countries have made them vulnerable to the manipulations of agents’ provocateurs”. These include aggrieved politicians, religious demagogues and greedy multinationals that employ these youths to achieve their selfish ambitions. It is clearly evident that the absence of job opportunities in developing countries is responsible for youth restiveness with disastrous consequences.

This leaves in its trail low productivity, intra-ethnic hostilities, unemployment, poverty, prostitution and environmental degradation.

the youth are described as full of youthful exuberance. This raw energy has of late been channelled into unwholesome and socially unacceptable venture that threaten the very fabrics of the community. Also the issue of availability and accessibility of drugs in street corners which predispose the youth to abnormal behaviours when they come under their influence, adds to youth restiveness.

It is also believed that some disgruntled leaders, elders and politicians in our society resort to recruiting youths for settling scores or using them against perceived enemies.

With this trend, the activities of these youths have degenerated to outright criminality.

Once these youths get mobilised for these nefarious activities, they become uncon-

,

*From left: Dr. Ayo Ogunsan, Chairman, Executive Trainers; Dr. Simon Daniel, DVC, Kaduna State University, Jenny Brown, Associate Dean, University of Wolverhampton Business School, Prof. Tenuche Marietu, DVC, Kogi State University; Mrs Ajoke Ogunsan, CEO, Executive Trainers, and Dr. Paschal Anosike, Senior Lecturer, University of Wolverhampton at the ongoing International Tertiary Institution training in the UK.

very year, about 300,000 graduates enrol in the NYSC scheme. This is definitely not the total number of graduates but it is a pointer.

According to the Population Reference Bureau, the population of youth in Nigeria is 43 per cent.

The Root Causes of Youth Restiveness ·Marginalization: The notion appears to have gained ground that the youth resort to restiveness because of their perceived marginalisation by the ‘selfish’ elders in the scheme of things in the communities. In order to get their share of the benefits accruing to the society, they resort to taking on their elders headlong, culminating in the restiveness rampant in most of our communities today.

It is also believed that some disgruntled leaders, elders and politicians in our society resort to recruiting youths for settling scores or using them against perceived enemies.

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trollable and the society suffers. ·Poverty Poverty connotes inequality and social injustice and this traumatizes the poor. More than 70 per cent of people in Nigeria are in abject poverty, living below the poverty line, and one- third survive on less than US $1 dollar a day . This figure includes an army of youths in urban centres in Nigeria who struggle to eke out a living by hawking chewing sticks, bottled water, handkerchiefs, belts, etc. The sales-per-day and the profit margin on such goods are so small that they can hardly live above the poverty line. Disillusioned, frustrated and dejected, they seek an opportunity to express their anger against the state. Scholars have over time agreed that there is a link among poverty, loss of livelihood, inequality, and youth restiveness as evidenced by the numerous violent protests against the wielders of power in Nigeria.

Vanguard, MONDAY, JULY 30, 2012 — 19

This House is empty

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igerians face a lot of challenges every day. Life, the most important thing in other societies is nothing here.

Nigerians die in droves by the day due to serious security challenges the nation is faced with. Nobody has had the courage to ask for the impeachment of the President for not protecting lives and property he swore to as the number one citizen of Nigeria to whom all Nigerians collectively surrendered their sovereignty. The House of Representatives does not see this as serious enough to task Mr. President.

But just last week, the members of the House of Representatives came up with the agenda of impeachment of the President for not implementing the budget to their satisfaction as at July 2012. Every Nigerian subscribes to Mr. President improving the lot of the nation by implementing the budget.

The threat is a wake up call for Mr. President, who many see as sleeping on duty, to do his job and call to order Ministers, Heads of Department and Agencies of government who are not performing their duties creditably. It is even time for a proper shake up of key officers of this administration.

Be that as it may, it is very curious that the members of the House of Representatives are asking for the head of the President over budget implementation. The first question is: Is budget implementation more serious than security even when a

senator was killed in cold blood? Is it not when Nigerians are alive and secured that they could talk about their welfare? When was the budget in question passed? When was it supposed to have been passed to meet the nation’s budget cycle? When did the 2011 Budget expire? Who caused the delay in the passage of the 2012 appropriation bill?

Except this House members are leaving in self delusion, they do not really mean what they said as they do not expect that in four months, this

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Many did, to the chagrin of the nation.

Take the 2011 Budget for instance, implementation of the budget in the 2011 fiscal year posed critical challenges according the report in the Ministry of Finance website.

The Director, Budget Office, Mr. Bright Okogun, in his report on the 4th quarter of 2011 Budget implementation just released said: “Indeed, added to the late passage of the 2011 Budget, the peculiarity of 2011 as a

Be that as it may, it is very curious that the members of the House of Representatives are asking for the head of the President over budget implementation

government would have achieved much in budget implementation. Nigeria is not known to implement capital budget with jet speed. It would have been news if the recurrent expenditure is the issue at stake. Recurrent has always been 100 per cent implemented while capital budget at best is 60 per cent implemented. President Umaru Yar’Adua was the first Nigerian President to order ministries, departments and agencies of government to return unspent capital budget.

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political transition year with the attendant implication for the constitution of a new cabinet, the implementation of the budget was difficult due to receipt of less than projected net revenues. On the expenditure side, while recurrent expenditure was on target, implementation of the capital budget had to be extended to 31 March, 2012 in order to allow MDAs more time to implement the budget.

The poor implementation of MDAs' capital projects is partly attributable to poor

project management practices by some MDAs.” Did the House members read this observation in the Ministry of Finance report on 2011 Budget implementation report?

The implementation of the capital budget in 2011 was extended to 31March, 2012 in order to give MDAs the opportunity to improve on implementation of their capital projects. If that is the case, when did the implementation of 2012 Budget begin? How fast was its implementation supposed to be? What makes 2012 so different from other years that the House is threatening impeachment? Is there some self-serving underlying interest?

Nigerians need full disclosure. Should not these members have discussed with their colleagues in the executive arm of government?

Is the legislative arm no longer part of the government?

Were these members not part of the delay in the passage of the 2012 Budget?

The data from the Office of the Accountant-General of the Federation indicates a significant improvement in MDAs’ utilisation of funds as at 31 March, 2012 with an overall average utilisation of over 87 per cent of the cashbacked funds available for the implementation of their capital projects/programmes. The data also showed that only N713.14 billion (or 87.9 per

cent) of the total cash-backed amount had been utilised by MDAs as at 31st March, 2012.

An analysis of the 53 MDAs reported upon by the Office of the Accountant-General of the Federation (OAGF) indicated varied level of utilisation rates. Forty seven (or 88.68 per cent) of the MDAs including: Agriculture, Education Water Resources, Works, Transport, Niger-Delta, Defence, Federal Capital Territory Administration, Presidency, Trade & Investment and Information & Communication, each had overall average utilisation rate of 87.9 per cent.

Thirty-eight out of these (or 71.7 per cent of the MDAs) including Defence, Education, Water Resources, Presidency, Police Service Commission, Auditor-General, Office of the National Security Adviser, Foreign & Inter-Governmental Affairs, Code of Conduct Tribunal, Federal Civil Service Commission and National Wages & Salaries had utilisation rates of over 95 per cent of their respective cashbacked releases.

The utilisation report further shows that six MDAs (or 11.32 per cent) which includes Women Affairs, Petroleum Resources, Revenue Mobilisation, Finance, Code of Conduct Bureau and Health had utilised less than 87.9 per cent.

Going by past performance, it is too early to judge the performance of the 2012 Budget.

BUSINESS & ECONOMY NICON fraud: Court reserves Oct. 17 for adoption of addresses

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n Abuja High Court on Thursday reserved Oct. 17 for the adoption of addresses on the alleged N10.4 million fraud leveled against two former officials of the National Insurance Corporation of Nigeria (NICON). The Independent Corrupt Practices and Other Related Offences Commission (ICPC) had in 2007 charged Okechukwu Chukwulozie, Angela Chukwulozie, wife of the first accused and Adedolapo Ogungbe with the crime.

Justice Mudashiru Oniyangi gave the date after the third accused person (Ogunde) had presented her defence. Ogunde, a former Deputy Commissioner in charge of Finance and Administration, had said that

the N3.5 million she received from the organisation was her legitimate entitlement. The ICPC had filed a three-count charge of corrupt advantage against Ogunde.

The prosecution alleged that the third accused used her position to illegally withdraw the amount to furnish her apartment located in Maitama.

Ogunde, however, said the money was her statutory in lieu of 28 days allowance meant for her position upon assumption of office in 2005. “I used the money to make the place livable as I bought curtains, four airconditioners, microwave, refrigerator, beddings and a set of upholstery. My Lord, I have done no wrong as the money was officially meant for me and two other executive commissioners. In fact, Mr

Badugu Useni, a commissioner in charge of operations, was paid before me. My allowance was unnecessarily delayed and I became aggressive in

November 2005.

“I was advised to suggest a name that the money could be remitted to and I used Mrs Aina Attahiru, my friend and

*From left: Dami Adefila, Client Relationship Management Manager, AM Facilities; Mrs. Wale Odufalu, GM, Corporate Services, AM Facilities; Mrs. Margaret Mebude, Principal, Akande Memorial Senior High School, Ikoyi and Mr. Aramide Twins, Vice- Principal during the Fire Safety Awareness programme held at the school as part of AM Facilities' CSR project

the Managing Director of Barn Root Homes Creation. My Lord, it would also interest the Court to know that I and the first accused were not paid the monetisation allowance that formed part of the prosecution’s evidence,” she said.

While Ogunde is facing a three-count charge, the first accused (Chukwulozie) is charged with eight of the 15 charges. The second accused and wife to the first accused is charged for allegedly aiding and abetting the crime. The accused persons denied participating in any complexities that led to the alleged fraud.

ICPC had alleged that the actions of the accused persons were offences which contravened sections 12 and 19 of its Act. C M Y K

20 — Vanguard, MONDAY, JULY 30, 2012

Business & Economy BRIEFS

team of expert panelists who discussed how pension funds can be invested in critical infrastructure and what needs to be done to de-risk PPP projects to enable them to access investment from pension funds.

215 oil blocs await allocation — DPR

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he Department of Petroleum Resources (DPR) said that the country currently had 215 oil acreages awaiting allocation to oil companies. Mr. Osten Olorunshola, the DPR Director, said this when the House of Representatives Committee on Upstream visited the department in Lagos as part of its oversight functions. The director also said that 173 blocs had been allocated to various oil companies.

Olorunshola said that most of the oil blocs that had so far been allocated were in the Niger-Delta region. On the Petroleum Industry Bill, he said that its passage would save the oil and gas sector from danger and create an enabling environment for investment. Mr Muraina Ajibola, the House Committee Chairman, said that his team’s visit to the department was in line with the Standing Orders of the House. Ajibola said that the DPR had done well in terms of revenue generation, keeping the nation’s oil production capacity aglow and steadily maintaining its budget. He said that the committee would do its best to strengthen the DPR through appropriate legislation.

Ecobank Capital raises $228m first tranche of loan syndication for Olam Palm

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cobank Capital, the investment banking arm of Ecobank, the leading panAfrican bank, announces that it has successfully raised, in FCFA and Euro equivalent, the sum of USD 228 million required to close the first tranche of loan syndication on behalf of Olam Palm Gabon (OPG). The facility comprises a USD 20 million 10-year FCFA tranche and a USD 208 million seven-year Euro and FCFA tranche, extendable to 12 years. The second tranche of the syndicated loan is likely to be placed with international development finance institutions at a later date. Ecobank Capital acted as the mandated lead arranger, working with two co-arranging banks, namely, Afreximbank and BGFI Bank Gabon. The Central African Development Bank participated as a lender. The closing ceremony was held in Paris on July 12.

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*From left: Mrs Yemi Owolabi, Chairman, Finance Sub-Committee, CIBN 6th Annual Banking & Finance Conference; Mr Akin Fanimokun, Chairman, Consultative Committee, Mr. Uju Ogubunka, Registrar/CEO, CIBN at the Press conference organised by CIBN to officially announce the annual conference in Lagos.

Experts brainstorm on pension funds utilisation for infrastructure development

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xperts have called for more efficient ways to utilise and manage the pension funds as a buffer for infrastructure development in the country. The session put together by DETAIL Commercial Solicitors and Africa Infrastructure Investment Managers (AIIM) had last Wednesday, hosted an IPFA Nigeria briefing titled: Investing Pension Funds in Infrastructure Projects: the Key Drivers which attracted many dignitaries in the industry.

The briefing was held in conjunction with UK Trade & Investment, and the International Project Finance Association in Lagos. Mike Purves, Director of Trade of UK Trade & Investment, speaking on behalf of the Deputy High Commissioner, stressed the importance of the briefing as a means of bringing key stakeholders in the infrastructure financing sector to discuss pension funds as an alternative to infrastructure financing.

Nigeria has a considerable infrastructure deficit and one of the major challenges faced by project developers is securing project financing.

The briefing addressed the opportunities and challenges relating to tapping into the trillions of naira of Pension Funds in the Nigerian market.

Ehimeme Ohioma of National Pension Commission, Andrew Johnstone of AIIM and Ayuli Jemide of Detail Commercial Solicitors gave presentations on the regulatory, commercial and legal aspects respectively of investing pension funds in infrastructure projects.

Andrew Johnstone who spoke about the increasing global trend in utilising pension funds for infrastructure development, noted that pension funds are particularly suited to infrastructure projects because of their long-term nature. In the same vein, Ayuli Jemide o f D E TAIL Commercial Solicitors discussed the issue of capacity of pension fund administrators to assess project risks and the importance of having an understanding of the nature of infrastructure projects, as each project presents a

different set of risks.

While Mr. Ohioma, the Pencom representative, highlighted that Pencom has released an exposure draft of revised Guidelines on Regulation of Investment of Pension Fund Assets, he assured the briefing that Pencom has been and will continue to be very aware of and responsive to developments in the market to ensure pension funds can be invested in a diversified manner.

Also speaking, Mr. Taiwo Dauda, Executive Director of Finance and Administration at The Infrastructure Bank, led the

he panelists, including Wale Shonibare (Managing Director of UBA Capital Limited), Demola Sogunle (Managing Director of Stanbic IBTC Pensions Managers Ltd) and Patrick Mgbenwelu (represented by Tonna Ejiofor) of FBN Capital, spoke about the factors that hinder investment of pension funds in infrastructure projects.

Their discussions centred on a lack of bankable projects, high political risks and the inherent risk-averse nature of pension fund administrators.

Also discussed was the fact that the current volume of pension funds (N2.3 trillion) is still a lot less than the amount needed to close the infrastructure gap. Mr. Sogunle mentioned that the target is to increase the percentage of people who remit pensions (currently 5 million Nigerians), as this will significantly increase the volume of pension funds available.

Panelists discouraged the concept of instituting a requirement for pension funds managers to invest a minimum amount of pension funds in infrastructure projects, as there are insufficient ‘bankable’ projects to invest in.

NSE recovery: Onasanya harps on market control mechanism

BY NKIRUKA NNOROM

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he Group Managing Director of First Bank of Nigeria Plc, Mr. Bisi Onasanya, has said that strict market control mechanisms must be in place if the Nigerian capital market will attain the desired level of recovery envisaged by all participants.

Speaking while presenting a paper titled: Rejuvenating the Nigerian Capital Market for Sustainable Growth and Global Competitiveness: Issues, Challenges and Options, Onasanya stated that the market mechanism should be strong enough to drive efficient price recovery processes.

He noted that it was heartening that the current focus on macro-prudential

regulations was skewed in favour of reinforcing coordination across regulators in the financial services sector.

Onasanya observed that though the Federal Government has commenced efforts to design forbearance for brokers in order to help jump-start activity in the market, he noted that further refor ms to the economy, including such reforms as are necessary to boost final demand, especially through the availability of credit at the retail level, will be essential to drive a return of domestic savings to the capital market in the medium-term.

According to him, two ingredients must be in place for the bailout package being worked out for brokers to be effectual.

“First is the provision of funds

at concessionary rates. These new levels of liquidity will help brokers begin the balance sheet adjustment necessary to return to functional levels of liquidity in the market.

“Nonetheless, funds at concessionary rates would still be inadequate to address the over N300 billion operators’ debt overhang. In order to address this, the capital market would need forbearances on the debt owed by operators, including long-term restructuring of margin facilities.

“AMCON has addressed the bulk of margin lending driven by bank debt. But the bulk of the outstanding debt is owed on proprietary positions, and the obligations attendant upon this has been the single most important cause of industry operators’ insolvency.

Vanguard, MONDAY, JULY 30, 2012 — 21

Business & Economy

BASF projects 200bn Euro turnover from Africa by 2020

BY PROVIDENCE OBUH

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he German Manufacturing Conglomerate, BASF Chemical Company, has vowed to double African sales, projecting a turnover of 200 billion Euro as contribution from its African operations by 2020.

Speaking at the inauguration of the company’s regional office in Lagos, chosen to serve customers in Nigeria and other West African countries, President, BASF Business Europe, Middle East and Africa, Mr. Jacques Delmoities said that the region’s potential and Nigeria’s business horizon challenged the company into projecting an overall turnover of two billion Euro from its African operations in 2020, adding that the company achieved one billion Euro turnover from its African operations, excluding oil and gas, in 2011.

Delmoities said: “Through establishing a local presence in Nigeria, we will be able to understand our customers’ needs and enhance BASF’s market position.

“Africa is a huge continent with a wealth of raw materials and a growing population and the dynamically growing economy has enormous potential for BASF.” BASF offers polyurethane products such as foam for insulated panels, supplies admixtures for the ready-mix concrete industry, engaged in food fortification of staple foods such as cooking oil and flour through local partners in Nigeria, as well as protective coatings, waterproofing solutions and joint sealants, among others.

Apart from the construction

sector, BASF also targets the nutrition, pharmaceutical and home care markets in Nigeria and West Africa.

In her address, the Commissioner for Commerce and Industry, Mrs Olusola Oworu, disclosed that the state government is partnering with the Organised Private Sector (OPS) on ensuring improved security which would further curtail criminal activities in the state, saying: “ we are proud to say that the state is safe.”

Oworu who represented the Lagos State Governor, Mr. Babatunde Fashola said: “I believe the establishment of their physical office here in Lagos which is the financial and economic nerve centre, would further energise the country’s economy in many ways and would also reaffirm

Lagos State Government's commitment to focusing on industrial growth and development.

“We are focusing on ensuring that business environment is conducive, we are focusing on ensuring safety of property and infrastructure, we are also focusing on improving the security situation in the state.”

She recalled that the inauguration of the company was coming on the heels of th the 6 Lagos Economic Summit which was held in April during which the Governor told both local and international investors about the investment opportunities in critical areas, mainly power, agriculture and agro-allied industries.

“We are looking at the proposed international airport on the Lekki axis, we are also

looking at the deep sea port, we have started the procurement of the proposed international airport which will be constructed on publicprivate partnership basis.”

German High Commissioner to Nigeria, Mrs Dorothy Janetzke-Wenzel, pointed out that the company’s re-birth into Nigeria was part of her country ’s socio -economic commitment to Nigeria.

Janetzke-Wenzel added that the bi-national commission which Nigeria and Germany jointly established, have identified investments in energy, agriculture, pharmaceuticals and their economies generally, as well as politics and migration as areas of attention. She said: “Re-investing in Nigeria would further contribute toward in the actualisation of the Federal Government’s transformation agenda.”

he National Association of Microfinance Banks (NAMB) said that the total performing loans of the banks stood at N81 billion as at March 31, 2012. Mr Mustapha Yar ’adua, the Executive Secretary of the NAMB, told the News Agency of Nigeria (NAN) in Lagos that the amount represented the total performing loans from 2005 when the banks came into operation to March 31, 2012.

Yar’adua said that the total deposits for the period

FINO, ZaaEdge to promote financial inclusion technology in Nigeria

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inancial Inclusion Network & Operations (FINO), India’s largest alternate channel for banking services & banking technology service provider, has announced the tie up with ZaaEdge Resources Limited, one of the leading technology solutions providers. Through this strategic partnership, FINO would be entering Nigerian market that has a huge potential for providing banking services to the bottom of the pyramid population.

Towards this opportunity, ZaaEdge would promote FINO’s path-breaking banking technology solutions and services in Nigeria.

These are designed and developed keeping in mind the needs of illiterate, poor and rural people. The strategic partnership will extend the reach of FINO’s wide range of products to the Nigerian market

CBN Development Centre to train, empower 5,000 youths annually

By Johnbosco Agbakwuru *From left: Mr. Umar Adabara, Regional Manager, Apapa, Lagos, Unity Bank Plc; Mrs. Yemi Adeyinka, Regional Manager, Ikeja Zone, Unity Bank; Mr. Abayomi Oshunmakinde, Independent Auditor To the Aim, Save And Win Promo and Mr. Fidelis Ajibogun, National Lottery Regulatory Commission, Ibadan Office, at the Unity Bank Plc Aim, Save And Win Promo zonal draw held in Ibadan.

Microfinance banks’ loan portfolio hits N81bn —Association T

BRIEFS

was N34 billion, while the customers of the banks all over the country stood at 905,000. He added that the total performing loans for the period ended Dec. 31, 2011, was above N60 billion.

The director said that in spite of the absence of financial support from the Central Bank of Nigeria, operators had been able to increase their loan services to clients based on high demand.

He said: “According to

research carried out by Enhancing Financial Innovation and Access (EnFIA) in 2011, 33 million Nigerians are ready to patronise microfinance banks if they get access.

“The sub-sector could only be accessed by about 33 million Nigerians and increase its performing loans, if there is financial back-up from CBN and the Federal Government.” He said that the sanitisation exercise carried out in S e p t e m b e r 2 0 1 1

during which the licences of over 103 microfinance banks were revoked by the CBN, left the remaining banks more committed. Also, a research conducted by NAMB revealed that some of the banks are now extending to rural areas,” he said. Yar’adua urged the Federal Government to support the sub-sector with funds and facilities that would enable the 33 million Nigerians willing to access the banks to do so.

There are 837 microfinance banks in the country.

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HE Central Bank of Nigeria Development Centre is to train and empower 5,000 youths annually from the SouthSouth geo-political zone in small and medium enterprises. The DirectorGeneral, Micro Finance and Enterprise Development Agency in Cross River State, Mr. Ignatius Atsu disclosed this Wednesday during the presentation of certificate of incorporation to three cooperative societies facilitated by the United Cement Company, UniCem at the company’s corporate office in Calabar, the Cross River state capital. Atsu who said that Cross River State has won the hosting right of the nation’s apex bank enterprise development centre for the South-South zone explained that CBN would inject a lot of resources to assist the centre for the empowerment of the youths.

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22 — Vanguard, MONDAY, JULY 30, 2012

Banking & Finance BRIEF Sterling bags CITI excellence award HE decision of the Management of Sterling Bank to restructure its operational lines for efficiency and quality service delivery especially in electronic banking during the last fiscal year has started to yield the desired result. The bank at the weekend, clinched the prestigious CITI Bank Performance Excellence Award for 2011.

With an outstanding score card of 98 per cent or higher in her operations in Straight-Through-Processes (STP) and MT 202-based undertakings, a testament to the bank’s consistency in delivering accurate input and responses on a timely basis in line with the most stringent global benchmarks.

Sterling Bank beats other financial institutions in the country to bag the award.

The yearly award is p r e s e n t e d by C I T I , a leading investment bank in the world and a correspondence bank of note for several Nigerian banks, to leading financial institutions worldwide with state-of-the-art international electronic payment services that meet globally acceptable standards in correspondent banking, response quality & time and processing accuracy.

The bank in a statement noted that the award by CITI is a bold indication that the bank is on the right track in view of sustained efforts by the bank to make banking easier for its customers on all fronts.

According to Moses Akinnawonu, the bank’s head of Trade Services, “this achievement is a product of consistent high performance and focus on customer satisfaction. We will continue to provide value added service in all areas of our operations just as we see this award as an invitation to achieve more.”

Sterling Bank Plc, originally incorporated in 1960 as Nigeria Acceptances Limited, was licensed as Nigeria’s first merchant bank in 1969.

It has since grown in leaps and bounds even as it continues to reach for the summit of professionalism and global best practice standards.

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Protecting Customers’ Information: Will operators embrace global standards?

By BABAJIDE KOMOLAFE

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HERE are people who have vowed never to have anything to do with electronic payment again, no matter the preaching about the benefits.

They are bank customers who have fallen victim to electronic payment fraud or e-fraud, and lost huge sums of money in the process. Their bitterness is aggravated by the callous manner some banks usually respond to their plight. “Oh you must have compromised your PIN (personal identification number) by giving it to somebody or by allowing somebody to access it”, these banks tell such people.

It is not peculiar to Nigeria, e-fraud popularly known as ATM fraud is a global phenomenon. The amount lost to this fraud by customers and electronic payment services run into billions of dollars.

The first step to successful perpetration of this kind of fraud is to have access to the information of the customer, including the PIN, account number etc. The information is then used to produce a duplicate ATM card of the customer which is then used to access and steal his/her money. The information can also be used to access the money to make purchases or transfers via the internet and Point of Sale terminals (PoS). That is why e-fraud thrives during transition from cashless to electronic payment dominated economy, as Nigeria is doing. For most of part of the transition, most people are not yet familiar with the operations of electronic payment channels, and also their vulnerability to fraudsters vis-a-vis handling of their cards and PIN. Also because it is a new system, there are loopholes, vis-a-vis regulation and infrastructure that can be easily exploited by fraudsters.

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lobally, so much effort has been devoted to checkmating these fraudsters, and much of the effort is channelled towards preventing them from accessing customer information. This is done by ensuring that electronic payment systems and operations have the necessary security measures for protection of customers’ information. The aim is to ensure that no one can illegally access these systems and channels to steal information of customers transacting businesses over them. This effort have over time culminated to

,

*From left: Mr. Musa Itopa, Head of Payments System Oversight Office of CBN; Mr. Tunde Lemo, Deputy Governor (Operations), CBN; and Mr. Wale Ogundare, Associate Partner, Phillips Consulting at the workshop on Payment Card Industry Data Security System (PCIDSS).

Unfortunately, only one per cent of electronic service providers in Nigeria have systems that conform to this standard, consequently, 60 per cent of the electronic payment system infrastructure in Nigeria is said to be vulnerable to fraud

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what is called Payment Card Industry Data Security Standards (PCIDSS).

PCIDSS is the global minimum standard for protecting customers or users of electronic payment services from efraud. Any electronic payment system or channel that does conform to this standard is highly vulnerable to fraud.

Unfortunately, only one per cent of electronic service providers in Nigeria have systems that conform to this standard.

Consequently, 60 per cent of the electronic payment system infrastructure in Nigeria is vulnerable to fraud. Very disturbing! This is despite the directive by the CBN that all operators comply with this standard

by December 31, 2012.

This embarrassing vulnerability of e-payment to fraud in Nigeria and the need to conform to PCIDSS was the focus of two major industry gatherings last week. The first was a workshop on PCIDSS and the Cashless Nigeria organised by Phillips Consulting International and the Central Bank of Nigeria (CBN). The Second was the meeting of the Nigeria EFraud Forum (NEFF).

In her remarks at the NEFF meeting, Managing Director, Standard Chartered Bank, Mrs. Bola Adesola, said that every new system has its vulnerability and this should be addressed. “There is a lot of collaboration internationally to fight against fraud and Nigeria cannot afford to be left out,” she said. t the workshop on PC IDSS, Mr Musa Itopia, Head of Payments System Oversight Office of CBN said that there are three major reasons why electronic payment operators in Nigeria have not conformed to PCIDSS and hence the high level of vulnerability to fraud. The first is lack of management buy-out, the second is budgetary constraint and the third is dearth of Qualified Security Assessors (QSAs) to help them upgrade their system to conform to the standards. The way forward according to Emmanuel Obaigbon, Chairman, NEFF is collaboration and sensitisation.

He said: “The new standard, PCIDSS, will aid the security of electronic payment in the country, as it is associated with the management of privileged identities and controlling insid-

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ers and administrators from accessing sensitive data. “The move is a proactive process towards enlightening Nigerians, especially those in the financial sector on measures to mitigate fraud associated with electronic payments.”

According Mr. Emeka Emuwa, Chairman, Enterprise Bank, the industry needs to be ahead of fraudsters. “We must also be sure that fraudsters will follow the new form of payment both physically and logically.

As the fraudsters are planning, we need to develop our skills and plan.”

Encouraging operators to embrace the standard, Mr Adewale Obadare, Managing Director, Digital Encode Limited, a security solution company, said: “Compliance with PCIDSS helps to mitigate risks associated with prevalent use of banks’ cards and payment channels. There is a growing cloud community of fraudsters hoping to hack new electronic payment platforms. With this trend, PCIDSS has been mandated for all merchants or banks that store, process and or transmit cardholder data.

“Managing and monitoring access to the electronic payment environment while locking down administrative privileges is crucial to protecting sensitive data within this expanded threat environment.

Many organisations are still trying to catch up on PCI 2.0 requirements, and those exploring virtualisation will now need to fully understand new hurdles to meeting audit requirements and protecting sensitive customer data and financial information”.

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Banking & Finance

CBN bans debtor banks from interbank trading *As N266bn FAAC funds rescue interbank *Experts commend MPC decisions

By BABAJIDE KOMOLAFE

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HE Central Bank of Nigeria of Nigeria (CBN) has banned indebted banks from lending to other banks in the interbank money market. It also banned banks that lend funds in the interbank market from accessing its lending facilities.

Announcing this ban in a letter titled: Revised guideline for accessing CBN lending windows and repo transactions, to all banks and discount houses, Director of Banking Supervision, CBN, Mr. A. O. Idris said: “As part of the process of unwinding the extraordinary measures introduced in the wake of the global financial crisis and to ensure the effectiveness of monetary policy, any Deposit Money Bank/Discount House that obtains funds from any CBN lending window is not allowed to simultaneously place funds in the inter-bank market.

Deposit Money Banks/Discount Houses that also place funds in the inter-bank market are not allowed to concurrently access the window.

Any institution that contravenes any provision of this circular will be suspended from CBN’s money market window. In addition, the institution shall forfeit the profits it would have made on the transaction.

This circular takes immediate effect and supercedes all others relating to the above subject."

Meanwhile, an inflow of N266 billion Federation Accounts Allocation (FAAC) funds rescued interbank market from severe scarcity of funds and rising cost of funds.

The inflow revived liquidity in the market from a deficit of N222 billion on Wednesday to N186 billion at the close of business on Friday.

Short-term interest rates also fell sharply on Friday in response to the inflow. For example, interest rate on Overnight borrowing and OBB (open buy back or colaterised) borrowing which had risen to 18.5 per cent and 17 per cent in response to the decisions of the CBN to further tighten money supply fell to 13.5 per cent and 13 per cent on Friday.

Meanwhile, experts have commended the decision of the CBN to jerk up the cash reserve requirement (CRR) and the foreign exchange net open position (NOP) limit of banks.

The CRR is the portion of total deposits that banks are mandated to keep in cash, while the NOP is the amount of foreign exchange banks are allowed to keep per time.

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n Tuesday, the CBN at its monetary policy committee meeting (MPC) raised the CRR to 12 per cent from 8.0 per cent. It also reduced the NOP to 1.0 per cent of banks’ shareholders’ funds from 3.0 per cent.

This, according to experts, will help to checkmate inflationary pressures and stabilise foreign exchange.

In a comment sent to investors, Afrinvest, an investment

and research firm said: “The upward adjustment of the CRR in our view, is primarily a risk management initiative, taken by the CBN to reduce the excess liquidity in the banking system and minimize the upward movement in the MPR. This move should fine- tune the quality of assets in the loan books of deposit money banks (DMB) going forward.

“The downward adjustment of the net foreign exchange open position for DMB’s implies that the net difference between assets and liabilities of foreign currencies in bank balance sheets should narrow to 1.0 per cent. Thus, DMBs with excess foreign exchange assets have to sell down such positions by the announced deadline and this could lead to a re-evaluation of the naira in the near term.”

Commenting on the deci-

sions, Razia Khan of standard Chartered Bank, London said: “We expect the naira to be the immediate beneficiary of the policy measures announced today, with dollar/ naira rate likely to trade lower on the interbank market, falling again within the CBN’s official +/-3% band around N155 exchange rate peg.

In the absence of a more significant impact on Nigeria’s oil earnings, the peg is likely to be sustained, helped by the CBN’s latest tightening. However, global growth risks and the impact on oil prices, will still have to be monitored.

The CBN has consistently maintained the ‘soft’ nature of the naira peg. In the event of a severe global shock, the currency peg might still change. For now, it remains unchanged, supported by the latest policy action.”

Card Security: Interswitch achieves PCIDSS re-certification NTERSWITCH Nigeria Limited, an electronic payment switching firm, has achieved the Payment Card Industry Data Security Standard (PCIDSS) re-certification, making it the only Nigerian and West African organisation to be compliant two years in a row.

With this re-certification, Interswitch has reassured that card users would continue to experience enhanced payment account data security. PCIDSS certification represents a common set of security best

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practice that if adhered to, will ensure the safe and secure handling of payment card data and transactions.

The requirements ensure that the entities that process, store or transmit cardholders’ data meet and adhere to the following standards: maintain a secure network for processing transactions; protection of cardholders and transaction data while in transit or at rest on the network; regular monitoring and testing of IT infrastructure among others.

“We have demonstrated our commitment to raise the bar

on transaction security by seeking and achieving recertification based on the Payment Card Industry Security Standards Council (PCI SSC)”, said Mitchell Elegbe, Managing Director and CEO of Interswitch.

“Data security is a critical part of the switching business. In order to maintain and reinforce the same globally acceptable standards, we have gone to a great length and a rigorous process to ensure we are re-certified”, he said in a statement issued on Friday.

BRIEF FirstBank upgrades FirstContact for enhanced service delivery N line with global best practices and the quest to drive instant access to its products and services, First Bank of Nigeria Plc, has upgraded their contact center called FirstContact to an interactive, multilingual and 24/ 7 customer service center.

FirstContact, a major initiative of FirstBank was first created in 2008 to give customers increased access to banking services. With the recent upgrade, particularly the introduction of the Interactive Voice Response (IVR) system, the bank aims to provide customers with a state-of-the-art platform that offers a higher level of confidential banking by phone and enables the customer carry out several transactions by simply following a set of voice prompts and making selections on phones keypad.

The upgrade also ensures easy access to information on customer care initiatives in Pidgin, Yoruba, Ibo, and Hausa. This is designed to provide a wider platform for customer feedback while also facilitating faster issue resolution ensuring immediate resolution/response to the customer.

With the enhanced FirstContact, customers can initiate and conclude several enquiries and transactions without having to leave the comfort of their homes or visit the banking hall. The new features include: Self Services, Funds Transfer with the IVR system, Bills Payment, Live web chat, SMS to short code and the Multi-Lingual services.

Head, Marketing and Corporate Communications, Mrs. Folake Ani-Mumuney, FirstContact was designed to provide world class customer service via phone and e-mail interactions. Ani-Mumuney said it serves as the first point of contact between the bank and its customers and also acts as an intermediary between customers and other subsidiaries within the group.

“The upgrade of the contact center is another demonstration of our passion for constantly seeking innovative ways of giving our existing and prospective customers the best service possible.

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24 — Vanguard, MONDAY, JULY 30, 2012

Corporate Finance BRIEFS Total to sell gas network

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rench oil and gas major, Total (TOTF.PA ) is preparing to sell its domestic gas transport and storage unit, TIGF, in a deal that could help it raise about 2.8 billion euros ($3.39 billion), three people familiar with the plan told Reuters.

Total could use the proceeds of the disposal of the network, which operates in the southwest of France, for potential acquisitions as market players compete for shale gas and new natural resources discoveries.

“The process is at a very early stage. Total Chairman and Chief Executive, Christophe de Margerie should announce his intention to sell in September”, said one of the people.

Goldman Sachs (GS.N) and Lazard (LAZ.N) are vying for mandates to advise Total on the deal, the people said.

Citi faces huge loss over sunny brokerage appraisal

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itigroup Incorporated’s $22 billion valuation of its brokerage joint venture with Morgan Stanley (MS.N) reflects an extremely optimistic view of the future of Wall Street profits, making a multi-billion-dollar loss on the business more likely for Citi.

Sources familiar with the situation said Citi’s appraisal works out to 50 times current one-year earnings for the joint venture, Morgan Stanley Smith Barney. The long-term average price-toearnings ratio for retail brokers is only about 18 times.

Morgan Stanley’s $9 billion appraisal is about 20 times current earnings and implies an expectation that profits will stay in a rut, even when the costs of combining the two companies’ brokerages subside. The companies exchanged appraisals as a step to set the price that Morgan Stanley, which owns 51 per cent of Morgan Stanley Smith Barney, will pay to buy another 14 per cent from Citigroup.

People at both companies believe an arbitrator will come down somewhere in the middle, which would still force Citigroup to take a noncash charge to earnings to write down the value of its 49 per cent of the business.

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*From right: Hon. Chibudom Nwuche, former Deputy Speaker, House of Representatives, Guest Speaker; Arch Thomas Awagu, President/Chairman of Council, Institute of Directors and Mr. Femi Ekundayo, past President at the Institute of Directors of Nigeria July 2012 Members' evening/New members induction held in Lagos. Photo by Lamidi Bamidele.

AIHN advocates creation of stabilisation fund for capital market

By PETER EGWUATU

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he Chairman of Association of Issuing Houses of Nigeria (AIHN), Mr. Bolaji Balogun, has called for the establishment of a stabilisation fund for the nation's capital market as a way out of the downturn that has lasted for more than two years.

He made the call last week during a dialogue between the Finance Minister and operators in the capital market, organised by the Nigeria Economic Summit Group (NESG) in Lagos.

He advised the Federal Government to quickly intervene in the market if the country must have adequate growth and development.

According to him: “Whatever form of intervention in the market is necessary to address the liquidity problem, be it forbearance, stabilisation fund or whatever it may be called, is urgently needed.

However, some brokers had noted that debt forbearance does not mean debt forgiveness. They stressed that forbearance only allows the debtor to negotiate with the creditor so that they could agree on the repayment terms.

According to him: "I believe some brokers are already enjoying forbearance despite the fact that government has not formally unveiled its package. What the market really needs is a Stabilisation Fund that would ensure direct injection of funds into the market.”

Meanwhile, the Coordinating Minister of the

Economy and Finance Minister, Dr. Ngozi OkonjoIweala, while responding to the call for forbearance package for stockbrokers reiterated Federal Government's plan to work out a forbearance package for stockbrokers as part of measures to stimulate confidence in the Nigerian stock market and increase liquidity.

According to her: “If the economy is not doing well, the capital market cannot thrive, so the Federal Government is more concerned with projects that will benefit the majority of Nigerians in the short-term.

Government has to give priority to those areas that majority of Nigerians are concerned with, such as Power, infrastructure among

others. But Government has set up committee on forbearance to make recommendations on the modalities for intervention.”

It will be recalled recently that the immediate past President of CIS, Mr. Mike Itegboje, restated the need for a stabilisation fund, saying that would bring back the much needed investor confidence into the market.

According to him, the fund would go a long way in addressing the margin loans overhang, which had been posing a huge challenge to brokers.

He had noted that since the global meltdown, some countries had made use of such funds to cushion the effect of the meltdown on the market. “We as stockbrokers are again renewing our call for a stabilisation fund for our market. This fund is very necessary as it would help to mitigate the losses incurred by investors and stockbrokers in the capital market in the last few years. And so, we want the Federal Government to look into this issue as many countries have taken the route of this fund for their market and Nigeria should not be an exception.”

Itegboje suggested that the Asset Management Corporation of Nigeria (AMCON) could take up the challenge of ensuring that such funds were properly used in the market.

Champion Breweries records declining fortune as turnover, profits slump

BY NKIRUKA NNOROM

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he current year may not be rewarding for shareholders of Champion Breweries Plc, as the company may likely end the year on deficit going by the half year financial results recently released by the company.

A peep into the unaudited financial results for the period th ended 30 June, 2012, made available to the investing public through the Nigerian Stock Exchange (NSE) indicated that both earnings, pre and post tax profits, and other key performance indicators took a turn for the worst. During the period under review, the company ’s turnover slumped by significant 60.04 per cent to N127.979 million, as against N320.276 million in the corresponding period of 2011.

The gross profit nose-dived by 52.14 per cent from N96.634 million to N46.252 million, while the profit before tax slumped further from negative position of N249.530 million in

the preceding year to another negative of N422.569 million in the review period.

The profit after tax also recorded the same fortune as the pretax profit, declining by the same margin to a negative position of N422.57 million.

The company’s cost of sales rose to N545.939 million compared to N415.412 million in the same period of 2011, representing 31.42 per cent increase. The administrative expenses witnessed went up to N220.582 million from N129.200 million, a 70.73 per cent increase. On the balance sheet side, the net asset rose to N2.83 billion as against N2.03 billion in 2011, indicating 39.4 per cent increase.

The result released last week was in contrast to the envisaged value addition the brewer would enjoy as a result of its acquisition by Consolidated Breweries Plc. The Managing Director, Consolidated Breweries, Mr. Boudewijn Haarsma, has assured at that point that the partnership between the two

companies would also afford Champion Breweries the opportunity to enjoy better growth prospects, thus increasing its bottom-line.

He said, “As a result of this transaction, the acquired company would have good opportunities arising from this partnership with Consolidated Breweries. The reason is that the transaction will, amongst other things, provide an even better avenue for further development of the Champion Lager Beer brand.

“It will also provide the company with access to expertise, synergies in all functional fields and, not the least important, increase the capacity utilisation of its brewery through possible manufacturing of Consolidated Breweries Plc’s brands in the future.” He further stated that the partnership would enable Champion Breweries to have instant access to improved production capacity, which will allow it to address its current capacity constraints and further strengthen its platform for future growth.

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26 —Vanguard, MONDAY, JULY 30, 2012

Homes & Housing Finance BRIEFS FG tasks surveyors on high construction cost

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he federal government has charged quantity surveyors to help tackle the problem of high cost project construction in the country.

Vice President Namadi Sambo, who said the situation was no longer acceptable, gave nd the charge at the 2 building and construction economic roundtable, with the theme “The Role of the Building and Construction Sector in Achieving Vision 20:2020”.

Represented at the occasion

by Minster of Lands, Housing and Urban Development, Ms. Ama Pepple, he said: “There are insinuations that the sector is a conduit pipe for all forms of nefarious activities, thereby denying the economy the necessary resources for impactful development. The federal government is seriously worried about this disturbing trend, and hereby challenges quantity surveyors, as building and construction cost experts, to find a lasting solution to the problem of high cost of construction projects in the country.” Sambo noted that the expertise of quantity surveyors is needed to ensure increase in projects completion rate in the country, and also urged them to support government’s effort aimed at bringing sanity to the construction sector.

LG set to complete 250 housing units

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ji River local government in Enugu State is set to complete its Oji River Urban housing estate, comprising 250 housing units.Chairman of the council, Chief Gabriel Onuzulike, said while on inspection of the project that it was conceived because Oji town is an urban council with housing challenges, noting that some of the one-bedroom terrace houses were nearing completion. He said the housing units include three bedroom bungalows, two bedroom bungalows and one bedroom terrace houses mostly meant for workers that would be accommodated through mortgage agreements. Onuzulike said Oji River local government is a bridge between Anambra and Enugu states that needed housing accommodations for the growing population of the semi-urban council. He promised that before the second quarter of next year all amenities needed in the estate would have been put in place, adding that applications for ownership of the houses were already being received.

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•A typical development of mass housing

Building collapse: Experts seek quick passage of building code Stories by YINKA KOLAWOLE

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n the bid to curtail the incessant incidence of building collapse across the country, experts in the built environment have called for quick passage into law of the National Building Code to facilitate the regulatory process of policing construction of buildings.

The experts aired their views at the recently concluded 42 nd National Conference/ Annual General Meeting of the Nigerian Institute of Building (NIOB) in Enugu.

The builders noted that a building may collapse due to a problem, , but for the phenomenon to become a recurring decimal is unacceptable and must be curbed, adding that immediate review of existing laws and implementation of the National Building Code are needed to nip the menace in the bud.

They also called for an immediate inauguration of building laws review committee with all stakeholders’ involvement to harmonise them for proper enforcement by government at all levels.

In a paper titled: ‘Curbing the Incidence of Building Collapse in Nigeria: Sanctions, Liability and Legal Imperatives,’ immediate past President of Nigerian Institute of Building (NIOB), Mr. Dachollum Jambol, pointed out that in order to curb the menace, there is need for urgent implementation of the building code to address absence of planning of the nation’s towns and cities, incessant collapse of building, fire incidents, built environment abuse and other disaster.

He said the implementation of the building code would address the issues of dearth of reference design standards for professionals, use of unqualified persons for building production process and lack of maintenance culture.

Jambol, who is a lecturer in the Department of Building, University of Jos,

called for government’s collaborative efforts with professionals and regulatory bodies without any delay to conduct a comprehensive audit of all construction firms operating in Nigeria to ensure their level of compliance with the building code and all relevant industry practice regulation, legislations and controls.

“There is need for

comprehensive audit of all construction firms to assure quality and competence of personnel allowed into the industry and quality of products; and ascertain technological capabilities/ capacities for practice,” he said.

Also speaking at the event, Chairman, Council of Registered Builders of Nigeria (CORBON), Prof. Akin Akindoyeni, canvassed the immediate review of the National Urban Planning Law to take into consideration all policies and other laws relating to urban development, industrial practices, regulations and codes affecting the different aspects of the built environment, especially buildings.

Akindoyeni called on state governments to enact urban planning laws that would make the enforcement of the building code mandatory and provide the framework for the construction of green buildings in their various jurisdictions. He said CORBON had forwarded a sample of the bill on the NBC to every state governor in the country for consideration. The professor of building sought the review of other laws such as the Compulsory Builders Insurance Liability, saying the law would have been more enforceable if it had been made dependent on the provision of the National Building Code for Health and Safety Management as well as Quality Management Plans.

Stakeholders task FG on 1m annual housing target

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takeholders in the housing sector have taken the federal government to task over its targeted yearly delivery of one million housing units across the country.

It would be recalled that a couple of months ago, President Goodluck Jonathan at a Federal Executive Council (FEC) meeting directed the Minister for Lands, Housing & Urban Development, Ms. Ama Pepple, to set the machinery in motion that will ensure the provision of one million housing units annually in the country, starting from January 2013. The mandate came against the backdrop of the huge housing shortfall in the country estimated to be over 16 million, which the president noted requires special intervention for it to bridged.

Industry experts however noted that although meeting the target is a tall order, the projected number of housing units could be achieved with the involvement of the private sector and the provision of an enabling environment.

President of Real Estate Developers Association of Nigeria (REDAN), Chief

Olabode Afolayan, said the mandate is a wonderful idea but was skeptical based on the issue of official bureaucracy that has stalled similar initiatives over the years. He noted that similar directives in the past have not materialised as a result of the absence of the political will to make it happen, adding that it is one thing to say something, but another to muster the political muscle to turn it into reality.

According to him, the need to build as much as one million housing units annually for the populace cannot be faulted but noted that outlining the modality of actualising the mandate is fundamental. He asserted that unless the private sector was involved, the whole concept would be akin to mere political propaganda, adding that REDAN is ready to partner with government in making the dream of providing one million housing units every year come true.

On his part, President of Association of Professional Bodies of Nigeria (APBN), Mr. Segun Ajanlekoko, said though a lofty idea, it is not new. He likened the mandate

to the one given by the late President Umaru Musa Yar’Adua to provide a similar number of housing units, which was never actualised until his demise. He declared that the involvement of the private sector is needed to make the dream a reality, adding that the projection could only be realised if government could muster the political will to do so. According to him, if government is willing to provide the basic infrastructure and the enabling environment, the tendency is there for the project to become a reality.

In a similar vein, President of Nigerian Institute of Building (NIOB), Mr. Chucks Omeife, said government needs to take the issue of mass housing beyond mere rhetorics. He said unless the core professionals in the built sector are involved, it would be a futile exercise.

According to him, the right thing to do is to ensure that the professionals in the construction industry were allowed to make major inputs in the scheme. He added that the reason similar projects or concepts in the past failed are not unconnected with the absence of the political will to implement the plans.

Vanguard, MONDAY, JULY 30, 2012 — 27

Homes & Housing Finance

De-regulation vital for robust housing sector

in some cases the LGC may not have the expertise and manpower to carry out these functions.

This section of the constitution should be amended to accommodate and recognise the role private estate developers’ play in maintaining estates they developed. In this era of globalisation, there is the urgent need to de-regulate the maintenance of municipal services, so that the expertise and prudence of the private sector can be utilised to provide well-managed environment through the application of best practices.

The third issue has to do with the Supreme Court Judgment of 2003; the highlight of the judgment is that it buried the Town and R e g i o n a l Planning Act by v e s t i n g Development C o n t r o l functions on the state government.

The judgment did not take Good houses require funding for development and acquisition i n t o consideration the present threat of climate brought forward in the 1999 from benefitting maximally

By NWACHUKWU change as a result of global constitution.

This was from projects of the federal OBIECHINA warming, which can best be intended to make acquisition government. A case in point addressed through bilateral of land both easy and is the action of the then Oyo N the advanced western agreements not only between affordable but presently it has State Governor, late Bola Ige economies, housing nations but regions, like the become a cog in the wheel of of the UPN against the FG of development is used as a ECOWAS community. progress.

NPN in 1980. good indicator of the state of Development control is a In the law, the governor of There are many cases of health of the economy. It is major tool for addressing the state holds land in trust such, most recently, FHA also used to create climate change. for the people.

No transaction called for partnership bids for employment and generate Some state governments are can be valid unless he issues the development of 2nd Phase wealth because of the using this judgment to stifle a C of O or his consent is of Festac Town in a national multiplier effect it has on the the activities of agencies of required. This is not only true newspaper on Monday, April economy as a whole.

FG within their jurisdiction in for individuals and body 3rd, 2012, only for an agency Housing can only be many ways. A case in point is corporate but also for agencies of Lagos State Government to developed when land is Lagos State Government of Federal Government, with publish a caveat emptor in available, it cannot be done agencies that opine that land in the air, and it is key to any is their oil and should do what housing development. Major they deem necessary to concerns will be the maximise returns from land availability, accessibility, transactions. suitability and affordability.

If development is looked at Some issues have been from the broader sense as militating against the full defined by estate surveyors, realisation of the potential of there will be total chaos in the the housing sub-sector country as indigenes of the contributing to the massive oil-producing areas can stop growth of the economy, oil companies from operating wealth and job creation. in their territory until they Finance is needed for both obtain their approvals. funding the housing The Federal Government development and for should request for further empowering the intending clarification and beneficiaries to be able to interpretation of the another national newspaper the exception of land for purchase them.

The judgment from the Supreme on Wednesday, May 9th, prospecting for oil and gas procurement of funding at Court. If the present impasse 2012 telling the public to and those with well spelt out reasonable interest rate for still subsists, she should move beware. areas, like Inland Waterways both will dictate the delivery for constitutional amendment These anomalies can be Authority. and affordability. to save the country from corrected through These requirements of The availability, suitability, chaos. constitutional amendment. governor’s consent and C of affordability and durability of Finally, the discussions The second issue has to do O have made it very the construction materials will above reveal that there are with the provisions of Fourth cumbersome for owners of influence the cost of provisions in different parts of Schedule of the 1999 land to use their assets in construction and therefore the constitution that militate Constitution. It vested the transactions. This has affected the overall cost. The against the provision of maintenance of municipal negatively individuals, construction technology and affordable housing, in order services in the Local corporate bodies and even techniques in use affect the to overcome them, there is Government Council (LGC). agencies of Federal affordability and the quality need to reform, harmonise On the face of it, it appears Government.

State of housing to be delivered. them and bring all of them okay, but when and where a governments in different The most known and widely under a single bill. private organisation develops political parties from the discussed is the Land Use *OBIECHINA is an engineer an estate, conflict arises as to government at the centre Law/Act, promulgated by the with the Federal Housing who is to maintain these (federal) have used the Land military, incorporated into Authority (FHA). services, bearing in mind that Use Act to deprive her citizens the 1979 constitution and

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State governments in different political parties from the government at the centre (federal) have used the Land Use Act to deprive her citizens from benefitting maximally from projects of the federal government

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BRIEFS Imo, US firm sign MoU on housing

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mo State government and Bluefield Associates Incorporated, an American property firm, have signed a memorandum of understanding (MoU) to build a residential estate and an industrial park in the state under a private-publicpartnership (PPP) arrangement.

The deal was sealed recently when a former US ambassador to Nigeria, Ms. Robin Sanders, led a delegation of the American investors to Owerri, the state capital. She assured that, if the PPP works out well, it would enable Imo State have to access funds for development from international agencies, while expressing confidence that the evolving partnership would create job opportunities.

Vice President, Bluefield Associates, K.C Obioha, said his firm would provide the initial equity, management as well as fund the project, whose cost was not immediately disclosed.

In his remark, Governor Rochas Okorocha assured the visiting US investors that the state government was ready provide all the necessary economic incentives and land for the projects.

UN-Habitat appoints new country manager

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r Kabir Mohammed Yari has been appointed the new Habitat Programme Manager for Nigeria. He will oversee the United Nations Habitat Human Settlements Programme Support Office (HAPSO) in Abuja Yari, according to a statement, holds a B.Sc. Degree in Geography from the Bayero University, Kano Nigeria and a Masters Degree in Urban and Regional Planning from the Ahmadu Bello University, Zaria, Nigeria. In addition, he attended many short courses in Housing, Project Preparation and Appraisal, Public Private Partnerships and Urban and City Management among others.

He is a professional town planner with extensive experience in urban infrastructure projects, participatory planning, city development strategy and urban governance. He started his working career with the Federal Ministry of Works and Housing before joining Urban Development Bank of Nigeria where he rose to the rank of Acting Managing Director and Chief Executive Officer.

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28 — Vanguard, MONDAY, JULY 30, 2012

Insurance BRIEF STI settles N439m claims in first half

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overeign Trust Insurance Plc has paid the sum of N439.9 million as claims to various policyholders whose claims matured in the first half of 2012. In a statement to Vanguard, the company said that total figures paid as claims settlement between January and June 2012 was N439, 946,599.87, (Four hundred and thirty-nine million, nine hundred and forty-six thousand, five hundred and ninety-nine naira, eighty-seven kobo).

The breakdown, according to the company, showed that motor insurance recorded the highest figure of N206,958,578.43, followed by general accident portfolio which had N84,548,986.44 while N83,600.962.46 went into claims settlement on fire and special perils. Marine and aviation claims amounted to N39,685,847.72, engineering claims came to N23,333,591.65 while the oil & gas portfolio settled the least claims of N1,800,880.00.

In all, a total of 1,018 policyholders, were beneficiaries of claims settlement in respect of the different classes of insurance policies under the stable of the underwriting firm.

The Divisional Head, Technical, Mr. Tajudeen Rufai reiterated the company’s uncompromising stance towards prompt settlement of genuine claims.

He said: “A customer-friendly claims process has been designed to facilitate timely claims settlement with the major intent of delighting our esteemed customers as and when due.”

In the same vein, Managing Director/CEO, Mr. Wale Onaolapo stated that the company has lived up to its responsibility by fulfilling its financial obligation to the policyholders. He also stated that prompt settlement of claims enhances the reputation of any underwriting firm and as such, the brand equity and image of that organisation would receive a boost that can result to more patronage. "We are serious about our business in Sovereign Trust Insurance Plc and we hold our customers dear in everything we do,” he said.

He further said that the company will not leave any stone unturned in ensuring quality and exceptional service delivery to its various policyholders.

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r. Justus Uranta is the Managing Director of Niger Insurance Plc. In this interview, he revealed that insurers that covered the Dana plane that crashed are paying compensation to families of the victims to safeguard the image of the industry even when some deficiencies existed in the insurance contract

BY ROSEMARY ONUOHA Challenges encountered in settling families of Dana plane crash victims The London market is majorly the owner of aviation insurance and they know the extent the business has gone there. Aviation insurance is highly capital-intensive vis-a-vis Nigerian operators' capital base. Everything boils down to having sufficient capacity and being able to carry these risks. Some time ago, insurance companies increased capital base. Before then, for aviation; oil and gas and huge marine businesses, Nigerian operators were more like post offices because our capital base was very low and you cannot carry a risk that can swallow you when claim occurs. But I thank God that we are building capacity increasingly to the extent that we can boast of being able to •Uranta pick some percentage of these risks especially now that we are being encouraged by the local content policy.

However, I will be more comfortable if insurance companies can retain more business in our local market because I am a businessman and my bottom-line is to have more business that I can keep rather than sending them to already enriched economies.

Well, for the Dana plane crash, the industry provided cover for it but there were certain challenges which created some difficulties in the market but I think that the matter has also been

By ROSEMARY addressed.

Insurance ONUOHA business is like a binding contract and there are certain take advantage of the basic considerations which compulsory insurance the risk must be attached to. products under the Market When some of these factors Development and are deficient, the contract Restructuring Initiative, itself becomes questionable MDRI. Meanwhile, we are and of course those are the just in July, we have not challenges we are having today in the market.

at all that, there are a lot of things on their table, and I hope all these will be addressed.

Meanwhile most of us that are appreciative of the efforts of the government and are willing to take advantage of them are already doing so and it is adding to our portfolio.

Opportunities in the local content initiative The local content initiative is a policy that the government has instituted to encourage local operators and not only the insurance industry. What that does is that it has forced the local market to absorb increased capacity.

It started with 10 per cent involvement and climbed to 40 per cent now and the intent is for it to go up to 70 per cent in the future, we hope that it will get to 100 per cent. What that has done for us is to make us sit up in terms of improving our capital base because if your capital base is low, you cannot participate in the local content policy. Because of the nature of our business, if you are may be in marine business where you are not directly faced with mitigating a loss, perhaps the scenario may be different but whereby we are in a position where we have to meet a claim when a loss occurs, then we must be sure that our capacity is sufficient to carry such risks that have been bestowed on us so to speak.

Compensation to families of Dana crash victims is to set positive example — Uranta

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ut I want to belief that the practitioners want to set example by encouraging the aviation industry to continue to patronize us. So what we are trying to do is actually being able to meet these risks when in actual fact there are some deficiencies. I am very sure that the market will be able to cope with these challenges.

N1 trillion GPI target by NAICOM Well, remember that the N1 trillion Gross Premium Income target for the insurance industry by the end of year 2012 by the National Insurance Commission, NAICOM, is just a forecast.

It was a kind of challenge to insurance practitioners that they should work hard and

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of that and every insurance company has also done so.

Even NAICOM have put enough efforts to assist us, they have gone on road shows and all that to sensitize the public. What perhaps has not been properly done is to give the MDRI the teeth to bite in terms of proper legislation to compel the

Insurance business is like a binding contract and there are certain basic considerations which the risk must be attached to; when some of these factors are deficient, the contract itself becomes questionable and of course, those are the challenges we are having today in the market

gotten to December and from now till December something could happen and we might get there. Seriously speaking all the insurance companies are working hard to reach there. Here in Niger Insurance, we have a department that is taking care

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public to take advantage of that. For example, I, as an insurance practitioner, I cannot walk up to your house and tell you that your two story building must be insured. There is no such legislation yet to support me.

But the government is looking

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o by extension, we at Niger Insurance have embraced capitalisation and also expanded our retention capacity. In the past where we use to have like 10 per cent, we have set up to 20-25 per cent as the case may be so that we can be able to play well under this advantage that have been given to us.

So we are continuously reviewing and improving our retention capacity in terms of our reinsurances. That is what we are doing to play effectively in order to take advantage of the local content exposure.

Effects of Boko Haram on insurance business Just like in any other business, we have had our challenges in the Northern part of the country, but we are still coping. It hasn’t been entirely bad. When the attacks get too much we ask our workers to close office for a while then we reopen again.

We cannot run away from a particular part of the country.

We are sure that the governments are on top of it and they are still promising us and we are striving.

Takaful insurance We were one of the early initiators of the takaful insurance product and the practice has been transformed over and over. In terms of what NAICOM is doing now, we have gone beyond that but we are always willing and open to accept whatever directives the regulator wants to give us to ensure that within the public domain we are always better off in terms of the benefits of these products.

Vanguard, MONDAY, JULY 30, 2012 — 29

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Vanguard, MONDAY, JULY 30, 2012 — 37

Appointment & Promotions

Meet Abdullahi, new NPA MD HE new Managing Director of Nigerian Ports Authority, NPA, Mallam Habib Abdullahi, holds a Master’s degree in Public Policy and Management from the Harvard University USA. He is also Edward Mason Fellow of Harvard Institute of International Development, Harvard University.

President Goodluck Jonathan, has Thursday last week constituted a new management team for the NPA led by Abdullahi after the dissolution of the former management team led by Omar Suleiman.

Abdullahi is the former acting Executive Director, Finance and Administration of the authority.

Others are Engr. David Omonibeke, Executive Director, Marine and Operations; Mr. Mohammed Sani Saleh, Executive Director, Engineering and Technical Services; and Olumide Oduntan, Executive

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•Mallam Habib Abdullahi, NPA MD Director, Finance and Administration.

A statement by Mrs. S.K. Ballah said the new Managing Director, 56, hails from Kano State of Nigeria.

He served in different capacities in the state as Direc-

tor of Budget, managing director of some parastatals and also as First Chairman/ Sole Administrator of Kabo Local Government, all in Kano State before joining the services of Nigerian Ports Authority.

Earlier, he served as the Chief of Staff to the Speaker, House of Representatives, National Assembly Abuja.

His university education was at the prestigious Ahmadu Bello University, Zaria where he bagged his first degree in 1978. He also attended the University of Bath and University of East Anglia all in the UK. He served as General Manager, Administration and was later deployed to London as Overseas Representative of the Nigerian Ports Authority, a position he held until December 2011 when he was appointed Ag. Executive Director, Finance and Administration.

UNIDO honours NIPC DG, Bello

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HE United Nations I n d u s t r i a l Development Organisation (UNIDO), has honoured the Executive Secretary, Nigerian Investment Promotion Commission (NIPC), Engr. Mustapha Bello with honorary DirectorGeneral of the organisation for his commitment and dedication to the promotion of investment in the country.

The Representative and Director, Regional Office, which takes care of Mali, Burkina Faso, Benin Republic and Nigeria, Dr. Patrick M. Kormawa who decorated the Executive Secretary, commended him for his sterling leadership qualities in advancing the economic development of the country through the activities of the Commission on the investment promotion and facilitation.

The Regional Director of

Okeke, Afudego, Ogunlowo join Ernst & Young E

RNST & Young has appointed three new Partners in Linus Osita Okeke, Benjamin Afudego and Funmi Ogunlowo in its efforts to strengthen capacity in the Forensic Investigative & Dispute Services (FIDS), Risk Advisory and Assurance business.

Okeke He becomes a Partner in Assurance Services for West Africa with focus onForensic Investigative & Dispute Services.

Okeke attended the University of Jos where he obtained a Bachelor’s degree in Law, emerging the best Law student in the fulltime class.

He also obtained a Master’s degree in Law at the University of Benin, graduating as the best student in his class.

He was called to the Nigerian Bar in 1993.

Okeke started his career with

•Okeke

the law firm of Messrs Iwelumo & Iwelumo in January 1994 and later joined the then Arthur Andersen (now KPMG Professional Services) and rose through the ranks to become Head of Forensic Services for Anglophone West Africa.

Afudego As a new Partner in Advisory Services, he will focus on Risk Financial Services.

Afudego brings to Ernst & Young’s clients over 15 years of world-class experience in governance, risk and controls.

He specialises in banking and capital markets and has extensive experience in public sector financial management as well as donor funded projects.

Prior to his recent appointment, Afudego was a leading member of the Risk department in Ernst & Young’s Fin a n c i a l Services Organisation (FSO) based in the UK, where he worked for seven years. During this time, he managed a number of high profile internal audit and internal control assignments for FTSE 100 companies, including the top five banks in the UK. He supported leading banks in assessing the effectiveness of sanctions processes & controls and in performing review of risk management functions and also played leading roles on a

•Afudego number of high profile assignments during the recent financial crisis, including managing the payments process for a bank that was in administration.

Afudego recently managed the review and design of the target operating model for internal audit and internal control function of a leading bank in Nigeria, including writing the methodologies and manuals.

He previously managed the reform of public sector financial management processes for governments of Ghana and Uganda, including the central and local government agencies and re-engineered the business registration process for Ghana.

Ogunlowo Ogunlowo is the new Partner in-charge of Diversified Products and Public Sec-

tor in Assurance service line.

A 1989 graduate of Accounting and Management from the prestigious ObafemiAwolowo University, Ile-Ife, Nigeria, he started his professional career in Accounting with Horwath Dafinone (formerly D.O. Dafinone & Co) in October 1990 and qualified as a Chartered Accountant in May 1992.

Ogunlowo is also an Associate Member of Chartered Institute of Taxation of Nigeria and joined the employment of Ernst & Young in October 2002 as a Manager with responsibility for the audit of various public sector and non-governmental organisations as well as other private companies. He was elevated to the position of a Senior Manager in 2005 and Associate Director in 2008.

•Ogunlowo

•Engr. Mustapha Bello, Executive Secretary, NIPC UNIDO noted with satisfaction the cordial working relationship existing between the two organisations and the role the NIPC had played in hosting them in their premises at the point of their entry into the country.

“UNIDO and NIPC have a very good collaboration and cordial working relationship since our entry into Nigeria through our activities, and this we promised to sustain and strengthen,” he stated.

Dr. Kormawa promised his organisation’s readiness to work with the Commission to promote small scale businesses in Nigeria as that is the catalyst for economic development and transformation, stressing that “the visit of NIPC was timely as it coincided with the reviewing process of their ‘Country Framework’ document”, and assured that the Commission’s interest will be taken care of in the programme. The Country Framework documents, he explained, cover three major thematic areas “Poverty reduction programme; Private Sector development and Energy and Environment.”

He commended the NIPC for their active role and participations in all programmes organised by UNIDO in time past and promised to continue to assist the Commission in the area of capacity building.

Earlier, the Executive Secretary commended the collaboration between the Commission and UNIDO which commenced in 2001 with the Country Service Framework (CSF) agreement in which the agency handled the investment promotion component.

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38 —Vanguard, MONDAY, JULY 30, 2012

“0810-0623558 On rubber. I am Dutch, but if I do not control myself, I will cry everyday over Nigeria’s paradise lost. Rgds Capt Addo Roosa.”

I want to extend my greatest gratitude to Captain Roosa for caring about Nigeria more than our leaders apparently do. I don’t cry over rubber because it represents several opportunities lost in this country. In my short span of life, I have been closely associated with at least four crops – two food and two cash crops – which if grown to the limit of our collective abilities could make our squabble over crude oil revenue disappear. These are: rubber, cashew, rice and sorghum. But farmers engaged in growing cassava, yams and maize, close by the farms with which I was involved, have provided me with a glimpse of what an agricultural paradise Nigeria can be.

Perhaps, the first notion anyone really interested in agriculture, and that should include our presidents, governors, ministers (agriculture, water resources, works, transport, finance and power etc), the central bank governor and the research institutes is that farming is not a neat job; it is not a desk job and it is certainly not theoretical. It is “dirty”, difficult, sometimes frustrating; but, in the end, thoroughly rewarding. The success of the nations responsible for the greatest output of food globally, rests in the fact that only a small percentage of people engage in it.

Generally, they are people who really love the work and will do nothing else. I left farming and rice milling in 1990 when

Diversification: Missing the boat on rubber – 2 I became head of an extended family at 46 with virtually all the family estates in Lagos.

There was no way I could handle the God-given task from Sokoto. Otherwise, I was ready to spend years in the north to help achieve the goal of making Nigeria self-sufficient in rice production. Then, I had no other idea. I just wanted to be a rice producer. The notion of everybody who has nothing to do should go into farming will not work. We might as well order everybody unemployed to go and become a musician or footballer. Only a few dedicated Nigerians can turn around our fortunes in agriculture. Our task is to find them.

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iven that as background, a product like rubber calls for even more dedication because the farmer has to endure a long period between planting the first seeds and harvesting the first output of raw rubber. Meanwhile, a lot of things could go wrong along the way. At this point, let me sketch for all of us the growth cycle of rubber and, in a third part of this series, the sort of interventions governments, banks, research institutes, farm extension workers etc, can provide will be discussed.

Rubber from seed to raw rubber: For the purpose of this part, we will assume a 100 hectare farm already cleared and ready to be cultivated. A virgin forest will require more time and

planting time will depend on how fast the clearing can be done.

Ideally, 555 stands of rubber can grow on one hectare meaning 5,550 plants from the nursery. Meanwhile, 70,000 plants can be grown in one hectare of nursery. So, the 100 hectare farm will absorb 55,500 if they all germinate. But, there is a catch, fortunately, not a big obstacle.

Seeds must be gathered in September when the pods on mature trees are exploding.

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woods” required to speed them on their way. Michelin, at the moment, is the major supplier of budding woods and that extent is a limiting factor to the effort to increase the output of rubber in Nigeria. Another supplier is at Akwete, Abia State; but Michelin remains the preferred supplier – for obvious reasons. But, as usual, this is not a total limitation, production of budding woods can be increased and, if not, they can be imported. About 80 per cent success is recorded from bud-

What we seem to lack is the will, the plan and the determination to succeed and earn the huge bonanza rubber offers

They are then planted on seed beds. Within 14 days, 20 per cent of what was planted will sprout vigorously. These will then be transplanted to the nursery where they will stay for 15 to 18 months. Here again, two snags are experienced and any error at this stage can result in the loss of the whole stock of nursery plants or low yield later on.

The plants from the nursery must be transferred to the farm in April-May, not later.

Second, the plants cannot be transplanted without first procuring the number of “budding

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ding; so in order to get 55,500 trees on the farm, the farmer must start with at least 80,000 plants from the nursery.

For maximum yield, the farmer must also procure ethereal, a chemical also used to improve the yield of pineapples and citrus fruits. The substitute for ethereal is calcium carbide but that chemical can hurt the plant. Swiss Pharmaceuticals used to be a big supplier of ethereal but there is acute scarcity of it now; perhaps because expected increased cultivation of rubber had failed to occur.

here are one or two other minor obstacles to consider; but those need not delay us here. The most important thing at this stage is to observe that from the time seeds are gathered and planted and the time the plant starts yielding, a total of seven (7) years would elapse. If there is one thing governments and the banks have been doing to discourage rubber cultivation the most, it is denying credit to cover the full cycle of the seed to plant of the rubber plantation. Credit is seldom available to the farmer, and when it is, the banks do not lend for more than five years – at most. Most often, the credit is for a shorter tenure and at interest rates of 25 per cent or more. No other rubber-producing country in the world punishes its rubber producer that way.

We still have a chance to get on the “rubber boat”; for many reasons which constitute our comparative advantages. First, Nigeria still has vast areas of land which have not been cultivated in the southern and middle belt regions. Second, we have abundant labor to do the work required for success.

Third, we experience long and heavy rain during the season and rubber loves rain. What we seem to lack is the will, the plan and the determination to succeed and earn the huge bonanza rubber offers.

The third part of this series will focus on what we need to do to participate andperhaps eventually lead in rubber production worldwide.

BUSINESS & ECONOMY CIBN to issue new Agency Banking licence in Nov

By PETER EGWUATU

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HE Chartered Institute of Bankers of Nigeria (CIBN) will issue another round of Agency Banking licence in November as part of measures to promote financial inclusion in the country.

Dr. ‘Uju Ogubunka, Registrar/CEO, Chartered Institute of Bankers of Nigeria (CIBN) revealed this weekend in Lagos that “ the newly introduced Agency Banking will help drive penetration of banking services to the rural areas.”

In his words: “Agency banking will drive an impression of banking in Nigeria. There are few branches of banks in the country and there is a growing need to spread across the country such that

the distance between where people live and where banks are located are close. So, instead of going to all parts of the country, building more branches, people are allowed to use their existing business outlets to provide banking services. With this, it makes banking become neighbourhood banking.”

He stressed that Agency Banking will help penetrate and propagate banking business in the rural areas, adding: ”It will help significantly and will make banking grow and more acceptable to the uneducated and those in rural areas.”

While commenting on the planned issuance of new agency licence, he said:” There are requirements that prospective agents must pos-

sess. They must undergo training and must have requisite skills needed for such operations.”

Commenting on cashless economy, he noted that “it is a good development for the country as there will be less

carriage of cash. Almost all the banks in the country have Automated Teller Machines (ATMs) situated in all areas of the country. It is a gradual process; we will get there where every person will accept the cashless economy. The cashless

system is part of what you will see with the mobile money. We are bringing market place to the mobile money, where you can buy airtime, pay your bills, and pay for tickets and so on. So I think the agency banking will grow and prosper in the rural areas. Among people that know how to use phones and other devices, you will see more acceptance of alternative channels.

LBS advocates industry growth through research

By PROVIDENCE OBUH HE Lagos Business School has advocated the need for industrial research, as a catalyst for growth and quality management decision in an organisation.

"There is no way out, they just need research, they need research to give them the facts and the figures on which to

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base decision-making, if they don’t have information then the management decision would be difficult and it would be difficult to strategise on decision that will move the business forward," says Mrs. Martha Onyeajuwa, Director of the GfK Centre/ Lecturer, Research Methodology.

Onyeajuwa spoke at an interactive forum on Market and Social Research with the

theme: Industry Growth through Research, under the auspices of the LBS, PanAfrican University.

“Nigerians do not believe in themselves, they do not give information, and I can tell you that they do research that make them carry out day-today operations, they don’t have strategic research which focuses on the long-term.

Vanguard, MONDAY, JULY 30, 2012 — 39

Micro-Finance

What micro entrepreneurs face doing business in Nigeria

By PROVIDENCE OBUH

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KELEME Frederick is the National Secretary of the Association of Micro Entrepreneurs of Nigeria, (AMEN). In this interview with Financial Vanguard, he highlights some of the challenges faced by Micro entrepreneurs. He lamented the unfriendly policies of the Lagos State Government and the Association's contribution to economic growth. He noted that the N200 billion MSMEs development fund (Credit Guarantee Scheme) may not get to the real sector. excerpts: What is AMEN all about?

Association of Micro Entrepreneurs of Nigeria (AMEN) is an association of small producers, established to promote the growth of members’ businesses and to contribute to the Gross Domestic Product (GDP) of the country. This is done through the technique of combining lower cost of production with competition through invention and innovation using our local raw materials for production of quality products that meet international standards.

How has the MSMEs benefited from microfinance banks in terms of micro lending, or what impact have they made to the association so far?

The truth is that MFBs in Nigeria are not doing the right thing they were set up for.

Fraud is their name. We advise our members to go for commercial banks if they have the requirement for borrowing to finance their businesses.

Also, MFB has failed and performed below average in the following areas: (1) High interest rate. (2) The managements are deceitful and operate their businesses with lies.

(3) Bank charges have skyrocketed. (4) They don’t keep agreements. (5) Some of their staff are dubious etc. They have not contributed anything, rather they have been feeding big on micro entrepreneurs who are desperate to collect loan.

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ou sound angry, unhappy, tell us more.

I am not angry and I don’t have any grudge against the MFBs in Nigeria. But I am angry at the exploitation of young Nigerian entrepreneurs who are desperate to borrow money to finance their businesses at all cost.

Can you tell us how much

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•Okeleme Frederick

I am appealing to the Minister of Industry and Investment as a matter of urgency to inspect facilities at various Industrial Development Centres nationwide

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interest MFBs charge and how it affects your association?

They charge between five per cent and 10 per cent per month, hidden charges not included.

Concerning your claims, just give details of your experience with the MFBs and how they have defrauded you.

I knew one of the MFBs who gave out Keke NAPEP to a cooperative and how one of the staff defrauded the cooperative in the name of processing papers which is one of the conditions these banks gave them.

Were you not in the country when the Central Bank of Nigeria withdrew operating licences of many of them, even the most viable ones? As a result of fraudulent activities, one of my members lost N300, 000.

I have not approached them for loan but I went to different MFBs in the country, about 20 of them on fact-finding mission and I can authoritatively tell you that their activities and mode of operation are the

same. My sister, I will advise you to do investigative journalism on the activities and operations of MFBs in Nigeria.

So what exactly are the challenges of the association?

Our challenges have been finance, the Bank of Industry is not helping, Commercial banks require billions of naira worth of collateral, work space provided already by SMEDAN are graveyards, no amenities.

Government regulations especially in Lagos, are killing businesses. Example is the activities of KAI Brigade, Tax officials, LASTMA, high cost of branding and transportation to mention a few.

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he Federal Government has approved N2 billion MSME development funds, which they will start disbursing soon. BOI too has been giving funds to MSMEs. What happened that AMEN members have not accessed the funds, or are their loan requirements beyond their reach?

My President had addressed the issue in Daily Sun publication requesting the BOI to come out and tell Nigerians how many micro producers have benefited from the fund.

We wrote to BOI, requesting to have a meeting with them, the acknowledgement duly stamped took three weeks but was not found in their system.

Concerning the N2 billion credit scheme, I bet you, that money will end up with few individuals who claim to be gods of industry in Nigeria.

What contributions have AMEN made to the economy?

We have put smiles on the faces of young entrepreneurs especially in area of NAFDAC registration and documentation, organising trade fairs and exhibitions through our meetings with various distributors within and outside Nigeria, organising trainings for them, provision of work space for members etc.

The association partners with over 28 government agencies and non-governmental organisations.

Our contributions to the growth of MSMEs are numerous. We contributed immensely to the drafting of National Policy on MSMEs, in collaboration with SMEDAN. Let me shock you, 80 per cent of micro manufacturing industries are owned by our members with their products duly registered by NAFDAC. In the area of agriculture, our members are doing well, some of them who cultivate maize, supply to members who are into food production, especially custard and corn meal.

In terms of employment generation, some of our members have up to 20-30 workers, while some employ up to five to 10 labourers. We have more than 180 members in Lagos who manufacture products and provide services.

What are some of the action plans you are putting in place?

By October, we will shock Nigerians with our One Million Man March in support of our vision.

We are happy the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is keying into the vision and supporting us through provision of work space across the country.

On the One Million Man March, what is your target and what is the vision you talked about?

On the one Million Man March, by the grace of God we will shock Nigerians because we want to repeat in Nigeria what happened in the Asian countries. Our vision is “One Family, One Product & Service.” This means in every home, there must be a member of the family who owns one business either in manufacturing sector, agriculture, engineering, information technology, woodmaking, or render services.

For instance, our youths and graduates are keying into the vision already, after graduation some of them come to our offices to start their own businesses.

BRIEFS More winners emerge in Unity Bank promo

By PROVIDENCE OBUH ORE winners have emerged in the Unity Bank Plc’s ongoing Aim Save and Win promotion as the train advanced to Lokoja, Kogi State for the second zonal draw.

Hauwa Musa, from Keffi in Nasarawa State, emerged the star prize winner of a motor bike, popularly called (Okoada) under the N75,000 category, while Jubril Ruqqayat from Suleija in Niger State went home with a television set under the N5,000 category.

The Zonal Director, Alhaji Aminu Bafa told the savings account customers that emerged winners in the draw, observed by representatives of the National Lottery Regulatory Commission that it was administered under transparent condition.

Bafa explained that the bank's initiative was designed to inculcate savings habit in Nigerians, stating that the promo would see more winners emerge in the next zonal and national draws before the grand finale which would be held in the Federal Capital Territory, Abuja.

Also speaking, Regional Manager, Shehu Sani, said “the promo is aimed at showing appreciation and rewarding loyal customers with various gift items ranging from cars, motorcycles, generating sets among others.”

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Academy for Entrepreneurial Studies to host Aregbesola HE management of the Academy for Entrepreneurial Studies (AES) Excellence Club will host the Osun State Governor, Rauf Aregbesola at the August edition Business Luncheon.

A statement from the Academy, signed by the Asst.

Registrar, Tony Ajiboro, said Aregbesola is expected to address the gathering on, Transformation and Investment Opportunities in Osun State.

Ajiboro said the luncheon which is billed to hold on Thursday, August 2, 2012 at the Lekki Oxford Hotels, will feature two eminent speakers who will be addressing different subjects.

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40 —Vanguard, MONDAY, JULY 30, 2012

Agric

Nigeria releases Vitamin A maize to improve nutrition

By JIMOH BABATUNDE with agency reports

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he National Variety Release Committee of Nigeria has released two new maize hybrids known as Ife maizehyb 3 and Ife maizehyb 4 that can provide more vitamin A in the diets of millions in the country.

The released hybrids recognised as IITA hybrids A0905-28 and A0905-32, respectively, have raised optimism about stemming the menace of vitamin A deficiency in the years ahead, especially among children, pregnant women, and mothers. The pro vitamin A is converted by the body into vitamin A when the maize is eaten.

“The hybrids are a product of nearly a decade of breeding for enhanced levels of provitamin A,” says Dr. Abebe Menkir, maize breeder with the International Institute of Tropical Agriculture (IITA), who led the development of the new maize hybrids.

The hybrids outperformed local checks with yields ranging from six to nine tons per hectare compared with two tons per hectare recorded on most farmers’ fields.

The vitamin A hybrids were developed by IITA in partnership with the Institute of Agricultural Research & Training (IAR&T) using conventional breeding in a project funded by the HarvestPlus—a Challenge Program of the CGIAR as part of strategies to address the prevalence of vitamin A deficiency.

Other collaborating partners include the Institute for Agricultural Research (IAR), Zaria; University of Maiduguri; International Maize and Wheat Center (CIMMYT), University of Illinois, and University of Wisconsin.

In Nigeria, vitamin A deficiency afflicts about 30 per cent of children below five years of age, almost 20 per cent of pregnant women, and 13 per cent of nursing mothers.

Vitamin A deficiency lowers immunity and impairs vision, which can lead to blindness and even death.

Researchers say the two hybrids can supply enhanced levels of vitamin A in the diets.

Maize is consumed by millions of people throughout Nigeria, whether roasted and eaten off the cob or as a dish prepared from fermented maize flour.

According to Menkir, maize is the most frequently consumed staple in Nigeria

with about 20 per cent of households consuming it at different times within a week.

“These hybrids will provide not only increased amounts of provitamin A but also improve productivity in farming communities,” he said.

Farmers who participated in the on-farm trials indicated that they liked the varieties, so there is a high prospect for quick adoption.

IITA and IAR&T, in partnership with private seed

companies, now plan to multiply these hybrids so they can begin distributing them to farmers by 2014, and to continue to develop higher levels of vitamin A in maize by conventional breeding.

“We plan to target areas where maize consumption is high to help address the problem of vitamin A deficiency in Nigeria,” said Dr. Samuel Olakojo, a maize breeder with IAR&T, who worked on the varieties with Menkir. The release of vitamin A cassava in Nigeria last year should help pave the way for broad acceptance of

the vitamin A maize. These new maize varieties are well suited to the tropical lowlands of many West African countries and are expected to spread beyond Nigeria’s borders.

In a parallel effort, the International Maize and Wheat Research Center (known by their Spanish acronym CIMMYT) – a sister CGIAR Center of IITA – has been breeding midaltitude vitamin A-rich varieties for Zambia in a project also funded by HarvestPlus, with release anticipated later this year.

Minister promises to support commodity associations

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he Minister of Agriculture and Rural Development, Dr Akinwumi Adesina, has promised to provide support that will strengthen commodity associations in Nigeria.

The minister made the promise in Abuja on Tuesday when Mr James Awoniyi, a member of the Cassava Value Chain programme of the ministry led some cassava farmers and processors to his office.

The minister commended the farmers and the processors for conforming to the Federal Government’s policy of 20 per cent cassava inclusion in bread-making.

Adesina said the Federal Government’s policy was about taking advantage of what Nigeria produces to develop and lauded the farmers’ doggedness in condemning calls that cassava bread was harmful to health.

“I am happy about the way you rose up in support of cassava in this country. Our

decision to include cassava in bread-making is purely an economic decision.

“The Federal Government will continue to create the enabling environment and the appropriate instrument for farmers and processors to grow, ” he said.

Adesina promised to address all challenges facing the cassava stakeholders by meeting regularly with them.

He said that the Cassava Value Chain programme had begun to yield results as the country had started exporting high quality cassava flakes to China.

Earlier, Awoniyi had said that they were on the visit to express appreciation to the minister for his efforts in transforming the sector.

In his remarks, Mr Segun Adewumi, President of Nigeria Cassava Growers Association (NCGA), urged the minister to include National Youth Service Corps members as agriculture extension officers.

He said the N1 billion

commercial agriculture fund had not been judiciously used by states and suggested that the ministry introduce land development programmes to increase cassava production.

Mr Femi Salami, a member of the National Cassava Processors and Marketers Association (NCAPMA), said that the Federal Government’s cassava development policy had helped in resuscitating the association’s business.

“The advent of this administration has brought hope to some of us. We want this policy sustained,” Salami said.

He urged the minister to help the association to facilitate access to loans from the Bank of Agriculture.

Mrs Folusho Olaniyan, Managing Director of the United Trading Company (UTC), lauded the reduction of incentive on cassava active agent, thereby encouraging bakers and millers.

BRIEF Former NACCIMA President urges adequate incentives to boost agric sector performance

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former President of the Nigerian Association of Chambers of Commerce, Industry, Mines and A g r i c u l t u r e (NACCIMA), has called for adequate incentives, information and accessible funds to boost the performance of the agricultural sector.

Dr. Simeon Okolo during the week in Aba said that he was worried that over 50 years after independence, Nigeria could still not attain food security.

He noted that over 70 per cent of Nigeria’s population were hungry and in abject poverty, in spite of the billions of dollars expended on food imports annually, and advocated for 'drastic' measures to address the anomaly.

According to him, some countries in Africa, Asia and South America have used the agricultural value chain concept to transform their agricultural sector.

He said that Nigeria could achieve such feat if the government could integrate smallholder farmers through the formation of cooperatives, to fast-track the agricultural transformation process.

Okolo, therefore, challenged the state governors to take advantage of the Nigeria Incentive Risk Sharing Scheme for Agricultural Lending (NISRAL), a CBN initiative, to improve food production.

He also urged the governors to boost increased production of both food and cash crops that they have competitive and comparative advantage in, as the sure way to overcome poverty and ensure food security in the country.

The high rate of poverty in the country, he said, called for urgent action, to revive the agriculture sector acknowledged as the mainstay of the nation’s economy.

He reiterated the need to re-orientate the stakeholders on the value chain concept to ensure its success.

Vanguard, MONDAY, JULY 30, 2012 — 41

Technology News & Reviews

CASHLESS NIGERIA: eTranzact's mobile payment forum lists challenges, sees future growth Stories by PRINCE OSUAGWU

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S eTranzact, a Nigerian switching and payment processing company gathered its partners and member banks to a forum in Lagos tagged Mobile Payment Forum, the company has confessed that despite infrastructural challenges facing growth of mobile payment in the country, there were bright chances that the cashless system would flourish beyond expectations.

The company through its Chief Executive Officer, Mr Valentine Obi said that at inception mobile payments faced a lot of challenges due to infrastructural challenges, making people doubt the security efficacy of the system.

According to Obi, “at inception, mobile payment transactions were SMS-based and these had its attendant risks.

There were also compatibility issues in the areas of mobile phone and software and these did not give users enough confidence in the system” He however said that those days were gone because as mobile technology keeps improving, operators like eTranzact have successfully overcome the challenges and are now providing cuttingedge electronic switching and mobile payment services to users.

Obi added that confidence has returned fuelling massive investments in the business.

For instance eTranzact, said it was collaborating with 11 Nigerian banks and one Ghanaian bank for its mobile banking services platform. A partnership he said had produced innovative mobile money, mobile banking services like UMobile, AccessMobile, Union Mobile, Wema Mobile, FCMB Mobile, Unity Mobile, Skye Mobile, First Mobile, Fidelity Mobile and Enterprise Mobile packages among others.

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he eTranzact partner ship with Ghana Commercial Bank Limited, according Obi, was to allow teeming Ghanaian users transact businesses via their mobile phones through the eTranzact platform just like their Nigerian counterparts Earlier in an interview with the Chief Technology Officer, of the company Mr. Richard Omoniyi, he corroborated his

*eTranzact Mobile Payment Forum: Obi demonstrates eTranzact mobile payment route to participants at the event.

CEO, saying that there was future for mobile payments and cashless society in general.

He, however, said that some of the bottlenecks that could impinge on fast growth of the system included very low awareness of the convenience and benefits of the system, particularly to those plying their trade on the informal sector of the economy.

According to him, “one of the most significant aims of the

mobile money scheme is to provide financial inclusion to the unbanked and underbanked in Nigeria. Getting more people to embrace mobile money depend on the level of awareness stakeholders create. Currently, the level of awareness is low and many people have yet to see the benefit of the system. It is thus important for the government to support other stakeholders to create massive public awareness for the public”.

He said that the CBN had granted eTranzact licence to run mobile money service in Nigeria and consequent upon that, the company floated a service platform known as PocketMoni, that allows users to send and receive money, pay their bills, anywhere, anytime, via their mobile phones. The service platform according to him has registered a user base of up to 500,000 between March to May, 2012 alone.

Main One brings Tata Communications’ Video Connect network to Nigeria *gives Africa’s key media hotspots exposure via Nigeria point-of-presence

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AIN One cable compa ny is setting a new tone in Nigeria’s quest for rapid broadband development.

Within two years of operation, the company has altered its own set businesses policies, just to incorporate the interest of Nigerian masses and answer truly to the brand’s original identity as the Nigerian broadband pride.

It formerly set out as a purely wholesale broadband company but when it probably saw that penetration was not getting to the hinterlands hence slowing down the broadband growth, the company changed tactics and announced readiness to go into the retail turf of the market.

Now, within few months of making the announcement,

the company has partnered different companies and has linked more of the people otherwise referred to as the last mile users to the ubiquitous broadband access.

Recently, the company tied a business partnership with Nigeria’s Communications Satellite Company, NigComSat for the same purpose of linking access via satellite to the areas that would have ordinarily taken time to reach.

However, its newest partnership is with Tata Communications, a leading provider of the New World of Communications. The partnership resulted in extending the company’s Video Connect Network into Nigeria The Video Connect service will allow broadcast and production companies in Nigeria to

distribute their live video content worldwide as well as enhance international broadcasters’ reach into this key emerging region.

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ata Communications’ partnership with Main One would see it connecting its global video network to an expansive local fibre network, creating a dedicated video network to also connect key broadcasters as well as production and post-production houses in Africa. Unlike traditional MPLS or contention networks, having a dedicated video network ensures the high quality and consistent video transmission needed for video broadcast, allowing Nigerian media companies to be truly global.

BRIEFS New iPad launched officially in Nigeria RONLINE Value Added Distributor (VAD) for Apple, Core Group Africa, last weekend announced the official entry of the new iPad, popularly known as iPad 3 in Nigeria. The group says the official starting price of the product would just be N105,000 (one hundred and five thousand Naira) only.

The new iPad became available in Nigeria from Friday as part of the next global rollout

by Apple. This is the first time the new product will be available through the official Apple channel in Nigeria.

The group also said that the product will be available in black or white in 16GB, 32GB and 64GB models. It features a stunning new Retina display, Apple’s new A5X chip with quad-core graphics and a 5 megapixel iSight camera with advanced optics for capturing amazing photos and 1080p HD video.

The new iPad delivers the same all-day 10 hour battery life and is amazingly thin and light. It runs almost the entire over 650, 000 apps on the iTunes App Store. It provides the most versatile, on-the-go user experience whether checking email at home, reading a magazine while waiting in a queue, watching a movie on a plane, updating documents before a meeting, checking sport fixtures, uploading a Facebook status, or

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Facebook records $157m net loss in Q2 OPULAR social site, Fa cebook has reported second-quarter net loss of USD 157 million of USD 0.08 per share. But its revenues however moved up 32 percent from a year earlier to USD 1.18 billion. Advertising is said to make up 84 percent of its revenues and grew by 32 percent year-on-year to USD 992 million. The company posted an operating loss of USD 743 million, versus a profit of USD 407 million a year ago, due to USD 1.3 billion in costs for share-based compensation.

Excluding this expense, its operating profit rose to USD 515 million from USD 477 million. The company invested USD 413 million in the quarter, moving up 213 percent year-over-year. However, it finished the quarter with total cash of USD 10.8 billion.

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42 — Vanguard, MONDAY, JULY 30, 2012

Aviation BRIEFS Eleven-year-old sneaks into Rome plane without passport or boarding pass

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n 11-year-old boy has taken a flight to Rome on his own from Manchester Airport in the United Kingdom without a passport or boarding pass. Liam Corcoran passed through security without being checked, before making his way on to the plane on Tuesday.

A Manchester Airport spokesman said: “This extremely serious matter is now being urgently investigated by officials from the airport and airline. It is clear that documentation has not been checked correctly at security and the boarding gate. The boy went through full security screening so the safety of passengers and the aircraft was never compromised.”

The Manchester Evening News reported that the captain of the flight was only alerted to the extra passenger while mid-air, when holidaymakers raised concerns. It is also reported Liam had ran away from his mother while she was shopping at Wythenshawe Civic Centre and made his way to the airport.

There, Liam is believed to have followed another family and, although he was scanned, was allowed through without boarding pass or passport. It is believed the crew failed to take an accurate headcount and with passengers and boarding cards matching up, the plane took off.

The boy remained on board after landing in Rome and then returned home on the same plane, where he was met by his mother, who had earlier been informed of his whereabouts by police. An investigation into the matter at Manchester Airport and the airline continues.

Aero commences third party maintenance of medium sized aircraft

By LAWANI MIKAIRU

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perators of Aero Airlines are to start rendering maintenance of medium sized aircraft services to other airlines and aircraft owners. This is coming as the airline has expanded its existing hanger in Lagos to meet the requirements of aircraft maintenance work including third party C-Checks

and servicing the West African sub-regional market for third party maintenance work.

It will be recalled that the Nigerian Civil Aviation Authority ,NCAA, in 2011 approved Aero as an Aircraft Maintenance Organisation, AMO, for “A” and “B” checks on Boeing Airplanes, various levels of checks on other Airplanes, Boroscope, Wheels and Brakes (Assembly, Overhaul, Replace-

*From Left: Mr. Abdoulkarim Soumaila, Secretary-General, African Telecommunication Union (ATU); Dr Eugene Juwah, Executive Vice-Chairman, Nigera Communications Commission, and Mr. Stanley Jegede, Chief Executive, Phase Telecom Limited, during the Nigeria Broadband Forum with theme: 'Demand as Catalyst for Boardband Services in Nigeria' organised by Nigeria Communications Commission, (NCC) held on last Thursday at Eko Hotel, Victoria Island Lagos. Photo: Kehinde Gbadamosi.

ERO Airlines is taking delivery of Boeing 737-400 and -700, including the Dash 8-Q400 new generation aircraft next month, as part of its fleet renewal programme.

The new generation aircraft are expected to assist the airline in its expansion programme, and add new destinations and offer greater customer service and comfort.

The new generation B737 aircraft is equipped with the C M Y K

that will enable them carry out ‘ C’ and ‘D’ Checks locally, government should give airlines duty waivers on spare parts and tax rebate. According to him ‘’ a lot has been said about carrying out “C” and “D” checks abroad. The expected savings currently anticipated from doing the checks in Nigeria are quite little due to the current taxation policy.

“Nigeria has relatively high import duties on aircraft parts.

Airlines typically fly their aircraft to, say, Turkey to have them serviced and relevant parts replaced. Once that aircraft flies back to Nigeria, the new parts are not subject to import duties as they are already installed on the plane.

This puts any Nigerian maintenance provider in a big disadvantage against foreign players. A Nigerian maintenance provider would need to import all spares used in maintenance and thus incur the import duties that those maintaining their aircraft abroad avoid completely.”

Captain George advised that if Nigeria wants to allow aircraft maintenance business to develop in Nigeria, it needs to create a level playing field between domestic and foreign operators. Right now, Nigeria is subsidizing maintenance businesses abroad and as a result, is not allowing the same business develop in Nigeria.

FG urged to improve infrastructure in airports

By DANIEL ETEGHE HE Federal Government has been charged to improve on the level of infrastructure in the nation’s airports and also step up the pace of work on the current remodelling exercise embarked upon by the Ministry of Aviation. The charge was given by the Managing Director, West Africa, Lufthansa

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German Airlines and Swiss International, Claus Becker, on Thursday in Lagos.

Speaking at a press briefing to mark the airline’s 50 years of operating into the Murtala Muhammed International Airport, he said if the government is really interested in making the aviation industry viable and growing the economy through the sector, it should be prepared to reduce the

AERO to take delivery of new generation aircraft

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ment, NDT), Air Frames (NDT), and Avionics and Battery (Cap Check, Overhaul).

This latest development by Aero will provide employment opportunities for more Nigerians and training and staff enhancement programmes for its employees.

However, the Managing Director of Aero, Capt. Akin George said for the Nigerian airline to set up bigger hanger

latest navigation equipment with lower fuel burn and increased reliability, making the aircraft more efficient, environment-friendly and easier to maintain.

Aero, Nigeria’s oldest aviation company with 52 years experience, has been operating scheduled services since 2000 . It has consistently operated with 80 per cent load factors over the last two years, and a completion factor

of 98 per cent for all its flights.

The rotary wing of its business has remained robust despite the challenges in the sector. The Managing Director of Aero, Capt. Akin George said: “We are currently focusing on a niche market of small medium sized oil and gas companies, not only the majors. We believe these companies have very great prospects in the future, and we can partner with them to grow as well.

number of levies being charged in the sector.

According to him, reduction in the number of levies being charged by regulatory authorities in the aviation sector will help the operators to grow. He stated that the airline declared a profit of over 30 billion Euros in its group network and about 60 million Euros in the Nigerian aviation sector pointing out the airline could have made more profit but for the number of levies imposed by regulatory authorities in the sector.

“We all know that an efficient airport structure determines the success and the economical prosperity of the country. I think you are also committed as a country in putting this in place. And the minister of aviation is doing a great job of really supporting whatever is needed in order to implement these infrastructure in this country.

“But I can only say follow that path, continue to really

support it because lowering taxes is key to international airline market, and is key to supporting and strengthening infrastructure and finally bringing wealth and prosperity to the country. And I believe that is something which is well underway in the country. Building infrastructure and airlines being part of that is something very critical for the economic development of the country.”

He said the airline is committed to deploying its best personnel to the Nigerian market and delivering quality services to its customers in the country adding that the country is a strategic market for the Lufthansa Group.

He said the passenger traffic of the airline’s network has increased from 1.5 million passengers annually when it operated two services weekly from Nigeria, affirming that the group now transports over one hundred million passengers annually.

Vanguard, MONDAY, JULY 30, 2012 — 43

Advertising, Media & Marketing

Beer Market: Goldberg pushes for market visibility, dominance Stories by PRINCEWILL EKWUJURU

EW months after the relaunch and takeover and brewing of Goldberg by Nigeria Breweries Plc, the beer seems to have re-aligned itself to market technicalities.

From observed trend, the brand is pulling some strings, using all Integrated Marketing Communication (IMC) tools to push for visibility and eventual market dominance, not minding the existence of other big brands in the market.

For dominance to occur, there are steps. Marketers and brand custodians often devise strategies for making inroads into the market, but unfortunately, only few succeed. It is a different ball game particularly when it comes to a product that had existed and needed to be relaunched, then it requires a superior market strategy. This happens when a brand modifies its key elements of the marketing mix without materially changing its target consumer group.

Some years back, Goldberg was consumed by a class of persons who were in the minority, and barely seen in notable bars and this hindered its growth for many years despite going through name change several times.

From the stable of its former brewer, Sona Breweries, Goldberg was crawling in terms of patronage until NB took over and gave it a facelift that is making it a soughtafter brand by its lovers, particularly in the western region of Nigeria, with pockets of presence in Lagos and some states.

In a bid to sustain its position and expansion trend, NB recently extended the brand’s equity profile with its relaunch in Ibadan, Oyo State.

The event reinforced the real meaning of “Goldberg” that is ‘Gold Mountain’, a name that best describes the beer, brewed from finest grains and hops.

Brewed to golden standard, the new improved Goldberg lager beer now comes with a distinguished attractive packaging (New Crown Cork, New Bottle, and New Labels) and improved product quality. At the trade briefing in Ibadan, the new brand was revealed to the key partners amidst rich cultural ambience that emphasized how the beer was expertly brewed to produce a crisp, distinctive fla-

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*From Left: Segun Aluko, Managing Director, BTL Solutions, Nigeria; Craig and Cynthia Cunningham, President and VicePresident, Market C&C Research, USA and Jonathan Alabede, Chief Operating Officer, Brand Futurz Limited, Nigeria at the ongoing Marketing Week Live event in London recently. vour, refreshingly pleasing aroma and a classy golden hue.

According to Mr. Walter Drenth, Marketing Director, Nigerian Breweries Plc,

“Goldberg came from the quest to satisfy all lovers of quality lager beer and we will never stop in giving consumers the best product and services with the hope of bring-

ing satisfaction. To our distributors and consumers around, this re-launch is definitely going to be a new golden business experience”.

Drenth had reassured consumers that in terms of pricing, Goldberg has a new pricing position different from the likes of other beers from NB stable. “A lot of our consumers who desire high quality lager beer who cannot afford the likes of Heineken, Star or Gulder lager beer now have Goldberg, stamped with a crest quality.

However, the reasons for the product re-launch generally includes when it is apparent to the marketer that the brand in question is losing share because its physical qualities need a rejig. It is also possible that, in comparison to competition, the brand is looking tired and old-fashioned; this could be a reason to strengthen the brand communication.

Advertising industry is a reflection of economy — D’Message boss

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doing much of what we are doing outside of Nigeria. So, we feel there is the need for us to come back to Nigeria because emerging business reality has shown that definitely, Nigeria should be our up market. And so, we have to strategise and make Nigeria our up market.

And we are going to use the structure here in Nigeria to drive other sub-regional markets where we operate.

R. Sola Odeja, Group Managing Director, D’Message, an integrated marketing communication company, had explored neighbouring West African markets like The Gambia, Sierra Leone, and others. Motivated, he is now back in Nigeria with full-fledged office to continue business. He had a chat with Princewill Ekwujuru.

Can I have insights into your pedigree?

I started from JWT/LTC and I was there for over 10 years before I moved to Media Supermart to become the Managing Director in 2001, after which I equally moved on to Innovative Media Concept, as the Managing Director, and eventually left in 2006 to set up my own business, which is D’Message.

D’Message as a practice was actually borne out of the quest to cater to the needs of advertisers who were moving to the West Africa sub-region. Because at that point in time, there was this mass movement of advertisers, the banks, moving outside of Nigeria to operate in some of these markets. And what we noticed was that there wasn’t the manpower base to support such businesses in those countries. So, we were forced to see what we could do in terms of setting up structures to support those businesses.

And that was why we actually went out to launch D’Message brand in 2006. And our first port

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•Sola Odeja, Group Managing Director, D’Message of call was The Gambia, after which we also launched the brand in the Sierra Leonean market in 2007 and thereafter we launched in Guinea Conakry and equally have footprint in Liberia. So, that was what informed why we had to start from outside of Nigeria.

The business was actually registered in Nigeria, but in terms of operations, we have to start our operations outside of Nigeria because of the exigencies of businesses we had to handle at that point in time.

Having been able to establish the brand effectively in those markets, the Nigerian market is where our key clients come from. Most of the businesses we do over there are from Nigeria but we didn’t have the structures in Nigeria to support those businesses, we were actually

hat is the core business of D’Message?

D’Message as a business was set up as an integrated marketing communications company.

What we noticed was that in those markets outside of Nigeria, the practice is not that specialized because they are small markets. So, you end up having an agency running PR business, running the branding, running the media planning and buying, running the research, running the content, so you have to do everything together because if you say you are specializing, the market cannot sustain that. And because that has been the platform we launched the brand, there is no way we are going to change that positioning in Nigeria. We are still going to be an integrated marketing communications company. If we are going into another specialised area, it means we have to launch another brand to cater to those businesses.

BRIEFS Champion Lager beer re-packaged

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OLLOWING the successful acquisition of majority stake in Champion Breweries (CB) Plc, Consolidated Breweries Plc has repackaged Champion Lager beer.

Mr. Boudewijn Haarsma, Managing Director, Consolidated Breweries Plc, at the unveiling ceremony in Uyo said, CB has a tradition in offering high quality brands to consumers at affordable prices.

After a year of hard work and investments, “I am pleased to say that we have now also achieved that with Champion.

The new refreshing packaging and improved product quality are the outcome of putting our consumers at the forefront in our thinking and action”.

The General Manager-Sales, Mr. Frank Van Asperen, while addressing trade partners stated that a full range of activities aimed at restoring Champion Lager Beer to its prestigious position will be rolled out. This includes activations for both trade and consumers at all touch points.

Speaking on the launch of the brand’s new visual identity & advertising campaign, the Head of Marketing, Mr. Prashant Patwardhan stated that “the new bold and contemporary label makes the brand stand out among its peers.

He further explained that “The new pay-off line, Rise to Glory is based on the premise everyone is a champion or has champion within.

Friendship Network donates to charity RIENDSHIP Network International Association, a non-governmental organisation has donated items and cheque worth N150,000 to the Little Saints Orphanage Home.

Dr. Nosike Agokei, president of the Association at the Home, said the reason for visiting the home was to contribute to the home by providing items of importance and also organise seminars to educate the children on how to succeed in life.

Speaking, Mrs. Dele George, Founder of the Home, thanking the Association and tutoring them in the processes of adopting a child in the Home, said one has to pass through the Minister of Youths and Social Development.

Speaking further, Rev. Mrs. Dele George said that concerning the education of the children, “we get sponsorship through good citizens of Nigeria and those that did not get sponsored, the Home bears their burden. Some schools give up to 50 per cent discount.” C

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44 — Vanguard, MONDAY, JULY 30, 2012

People in Business BRIEF SEC alleges insider trading in CNOOC, Nexen deal

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S securities regulator has filed a complaint in court against a firm controlled by a Chinese billionaire and other traders, accusing them of making over $13 million from insider trading ahead of a bid by China’s CNOOC for Canadian oil company, Nexen Inc. The Securities and Exchange Commission said the federal court in Manhattan had frozen assets worth over $38 million belonging to Hong Kongbased Well Advantage, controlled by businessman Zhang Zhirong, and other unnamed traders who used accounts in Hong Kong and Singapore to trade in Nexen stock.

They made trading profits of $7 million and $6 million respectively by using inside knowledge of the merger to buy Nexen shares before the announcement, the SEC says.

The trading was suspicious, the SEC claims in its complaint, because the accounts used to buy the shares had ‘either no history or extremely limited history” of buying Nexen shares before July 2012.

CNOOC said on July 23 it had agreed to acquire Nexen for $15.1 billion, China’s biggest foreign takeover bid.

Shares of Nexen jumped almost 52 percent that day.

The unnamed Singapore traders used accounts in the names of Phillip Securities and Citibank, while Well Advantage made its trades through accounts held at UBS Securities and Citigroup Global Markets. Neither of the Well Advantage accounts had traded Nexen shares since January 2012, nor had the Citigroup account been completely dormant for over six months.

Zhang Zhirong also controls China Rongsheng Heavy Industries Group Holdings, which according to a company filing in October 2010, entered a strategic cooperation agreement with CNOOC. A spokeswoman for CNOOC declined to comment. Calls to Well Advantage’s office in Hong Kong were not answered on Saturday.

Hong Kong’s Securities and Futures Commission also declined comment while officials at the Monetary Authority of Singapore were not immediately available.

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Success is not necessarily money or wealth you have acquired — S. OLOTU

BY MOSES NOSIKE

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ever in his wildest dream did Evang.

(Dr.) Solomon Ogheneweta Olotu, ever imagined that he will be what he is today considering the circumstances surrounding his growing up.

He had lost his father even before he was enrolled in primary school. Today, he sits atop S. O. Olotu Group of Companies as Group Chairman/Chief Executive Officer. In this chat with Financial Vanguard, Olotu tells his story. Excerpts: According to Olotu, it was difficult to acquire basic education but thanks to his mother who took it upon herself to ensure that her children got at least basic primary education.

Said Olotu: “Although we were not born with a silver spoon, but my father tried to do the little he could for us before death took him from the family.

That was before my enrolment into primary school. It was a difficult period for us. You know how difficult it is when the father of the house dies early leaving children and wife with little or nothing to survive on.

That was the situation I found myself. “ Faced with so many challenges, the young Olotu instead of bemoaning his fate, decided to make lemonade with the lemons life was throwing at him.

Said he: “At that time, there was nobody ready to sponsor my education. It was just my mother. Relations tried the little they could. My mother tried her best to make sure we got that basic education and we did little jobs to assist her. I struggled to finish primary school under that difficult situation. After that, I had to leave home to look for uncles who could help me continue my education since my mother could not carry on alone; but they could not help. Having seen the challenges in my family, I learnt to work hard anywhere I went. I hated to sit idle or follow friends to crack unnecessary jokes. I was always working to survive and help my widowed mother and my siblings. Again, I hated begging, so I was always trying to see what I could get for myself.”

Light at the end of the tunnel: Dr. Olotu’s friendly disposition paid off as according to him: “I was lucky when Shell Company came to my area for a project. I became friends with some Shell workers who assisted me secure casual work with Shell.

I did the job for some time before I went to Ondo to meet my uncle to help me further my education to university level.

My uncle who was a goldsmith said he would only assist me

•Olotu to acquire the skill if I joined him. I was disappointed because I had come with all my books with the hope that I would continue my education in his house. I lived with him for three years and all the while, I was feeling for my mother. I tried one other uncle in another city who is late now, it didn’t work out. After trying all and none worked out, I decided to learn bakery. When I finished learning, my uncle

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Having seen the challenges in my family, I learnt to work hard anywhere I went. I hated to sit idle or follow friends to crack unnecessary jokes. I was always working to survive and help my widowed mother and my siblings

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came up with one Isaac and established a bakery and we started running it. With time, I was promoted as a chief baker and after a while, because I was hard working, I was made an assistant manager.

However, we had to leave the community for Ilaje because of cholera outbreak in the town.

While in Ilaje, I started doing some jobs to help myself. I was there when a construction company, Demaz, came to construct a road. God helping me, I became friends with one of the workers and he asked me to start supplying the company granite but I told him I didn’t have money to do that.”

God’s intervention: “But the way God works for anybody He would have mercy on, my friend decided to source money for me from his company with the condition that when I supply and the company pays me, I would return the money and then take my profit. He did that for me several times until I realised enough money to start supplying the company granite.

The first time I supplied was five trips of granite that was not up to N2,000 even though it was the time of pounds and shilling.

Later, the supply business increased as the company was paying, I was supplying. The first time the company paid me, I was very happy. That was how I got registered with the help of one Benin man called Dickson and that was how I became a petty contractor. I want to say that it is good to be honest in whatever thing you do so that people will come tomorrow to entrust you with bigger things when you remain

faithful. At this time, I had started working with the Supplies section of Abraka University then called College of Education. I was handling the two until I was linked to Shell and we started supplying Shell and from there, we diversified into construction when Shell gave us little contracts to fill up pot holes and we did it to their satisfaction. I want to tell you that life is about determination,” he said.

Asked if he had expected that his challenges would eventually be his stepping stones to greatness, Olotu said: “It is God that gives you the determination. I could still remember there was a time we needed some money in my family to buy textbooks and other writing materials for school but it was difficult to get.

You meet uncles; they gave excuses why they could not give you. At a time, my mother was crying, calling my late father and blaming death as being responsible for the suffering of her children. While my mother was crying, I started consoling and comforting her to stop crying that I’m a big man and she should not mind anybody. And I promised her I would build a house for her even when there was nothing to boast of. Till today, my mother has not forgotten that and that served as a prophecy for her and she didn’t know that God spoke through me.

Thank God, here we are today, it’s the Lord’s doing not by my power.”

Advice to the youths: “If you must make it in life, focus on God. If you fear the Lord and follow His ways, even though people may make jest of you, don’t worry. Commit your ways unto God and He will bring your heart’s desire to manifestation. Don’t be jealous of people who are doing evil. Don’t make friends with criminals, and evil people.

Abstain from evil and focus on God, you will surely make it because every good thing comes from God. In addition to knowing God, be determined, focused and principled. Be principled enough to do what is right and resist the temptation to support evil. Even though we can make mistakes as human beings, quickly adjust yourself. Never think that you have known it all. Beware of the spirit of pride.

It is a dangerous thing. Imbibe the spirit of humility. It promotes people in life,” he advised.

True success: “Success is not necessarily the money or wealth you have acquired. To me, success is Godliness and contentment.

There are many people who have so much money in their account but they are not happy because many of them are still living questionable lives.

Success is living to the glory of God. “

Vanguard, MONDAY, JULY 30, 2012 — 45

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46 — Vanguard, MONDAY, JULY 30, 2012

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Vanguard, MONDAY, JULY 30, 2012 — 47

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48 — Vanguard, MONDAY, JULY 30, 2012

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index of food items) is now on the inflammatory threshold of around 15%.

Indeed, Sanusi noted that”the committee recognized that a logical response (under the circumstances) would be an increase in the MPR, especially, considering the impact of sustained liquidity in the banking system on exchange rates. Consequently, rather than further fueling the rate of inflation with high MPR, the committee decided to increase the Cash Reserve Ratio from 8 – 12%”.

CBN and the Ostrich recognise that this column has not deliberately set out to carelessly oppose the policies of the CBN without any just cause!!

Alternatively, while we have ceaselessly maintained that CBN has in its portfolio the antidote to the problems of bank lending to the real sector and fund diversion to speculative foreign exchange transactions, Sanusi, unfortunately, in his media address lamented that the apex bank was handicapped as it could not force the commercial banks to lend. Presumably, this could also mean that CBN, in spite of the usual braggadocio on its ability to supervise and control the banks may indeed have compromised that ability; that, of course, would be very tragic.

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t is also curious that in spite of banks’ aversion to real sector lending, and their evident affinity for anti-social speculative forex activities over the years, CBN, nonetheless, continues to featherbed the money deposit banks at the expense of our economic and social welfare. Indeed, we recall the humongous bailout sums, which the CBN made available to save the banks and encourage them

to support the real sector.

The additional public funds of over N2tn injected into the banks through AMCON has also done little or nothing to boost lending to the real sector nor has it restrained the banks from speculative forex trading.

Consequently, the ultimate impact of CBN’s and AMCON’s injections have been the instigation of an inflationary spiral, because these funds, which are lit-

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AST week, CBN’s Monetary Policy Committee agreed to keep the Monetary Policy Rate (MPR) at 12%, but decided to increase commercial banks’ Cash Reserve Ratio (CRR) from 8 – 12%.

In the aftermath of this decision, CBN accused the Money Deposit Banks of not lending to the real sector.

CBN governor, L a m i d o Sanusi decried the reality that “rather than lend to the real economy, the banks have continued to take advantage of the high yields of government securities to direct credit away from the core private sector.”

Not only that, CBN also belatedly recognized that the excessive liquidity of the banks had provided opportunity for speculative activities in the forex market.

Sanusi finally concluded that the product of banks’ anti-economy activities is the reality of aggregate domestic credit declining by over 5% between June 2011 and June 2012.

Regular readers of this column may be forgiven if they imagined that Les Leba was actually the speechwriter for Sanusi’s presentation, because, the observations expressed by Sanusi are in full consonance with our advocacy in this column for almost a decade. To that extent, therefore, I feel vindicated that, finally, the authorities now

apparent collusion with the banks, instituted the cashless policy in the expressed hope that the operational cost of running each bank would fall by at least a third. CBN had earlier noted that cash handling costs were responsible for over a third of the infrastructural and labour costs in bank operations; therefore, ‘cashless’ banking should reduce bank-operating costs accordingly, and thereby en-

While the money deposit banks go home with a smile on their faces everyday, millions of ordinary Nigerians go home with a huge frown on their faces because of the economic deprivations ignominiously nurtured

by CBN

erally cash creations by CBN, inevitably increase money supply and engender a cash surfeit in the system. In other words, while the money deposit banks go home with a smile on their faces everyday, millions of ordinary Nigerians go home with a huge frown on their faces because of the economic deprivations ignominiously nurtured by CBN. Not yet done, CBN, in

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ndoubtedly, CBN ap pears totally confused; meanwhile, it stubbornly refuses to accept the truth that the poison in its monetary model is its monthly substitution of naira allocations for dollarderived revenue. This, surely, instigates the eternal curse of excess liquidity and also drives high interest rates and fuel prices, and further provides an unending source of funds for speculative forex trading.

Until CBN accepts this reality, its shenanigans will be synonymous with the ostrich with its head stuck in the sand in the hope that it would become unnoticed; it would be a mark of gross insincerity for CBN to follow suit.

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courage banks to lend to the real sector. Well, regrettably, once again, there is no indication that the banks are better primed or inclined to either lend to the real sector or to curb their appetite for speculative forex trading. Furthermore, CBN is evidently also in a dilemma concerning its core mandate for price stability in the economy, as core inflation rate (which includes price

SAVE THE NAIRA, SAVE NIGERIANS!!

BUSINESS & ECONOMY

Increased portfolio investment detriment to economy-CBN

By NKIRUKA NNOROM

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he Central Bank of Nige ria (CBN) has warned that continued increase in inflow of portfolio investment over Foreign Direct Investment (FDI) into the country portends danger to the entire economy.

This is contained in the quarterly review of development in the external sector of the Nigerian economy for the first quarter ended 31st March, 2012, released by the CBN’s Trade and Exchange Department.

The report said that aggregate foreign capital inflows into the country for the quarter stood at $5.53 billion up from $3.48 billion and $3.39 billion in fourth quarter and first quarter of 2011 respectively. However, portfolio investment inflow represented 69 per cent of the total inflow in the first quarter, while FDI accounted for the remaining 31 per cent.This trend C M Y K

if unchecked would have negative impact on foreign exchange management going forward, the apex bank warned..

Further analysis revealed that FDI dropped from $2.13 billion in the preceding quarter to $1.72 billion in first quarter of 2012. In contrast, estimated Portfolio Investment inflows increased significantly from $1.36 billion to US$3.82 billion during the same period The apex bank observed that the decline in FDI inflows during the review period was traced to the insecurity occasioned by terrorist activities while the increase in portfolio investment inflow was attributable to the positive effect of the Bank’s policy on foreign investment in shortterm instruments and the relatively high yield on those instruments.

“Portfolio investment at 69 per cent of total capital inflows portends serious consequences for foreign exchange management

in the event of sudden portfolio reversal. There is therefore, need to closely monitor this inflow and put in place measures to stem the adverse effects in case of a reversal. “Also, the Management should consider reducing the reserve holding of 7.3 per cent in Euro and diversify to other stable investments in view of the unabated Eurozone debt crisis,” it said.

On a brighter side, the report noted that there was general improvement in the performance of the external sector as evidenced by the robust current account position which it attributed to downward trend in nonoil imports and deficit in the services account, saying that other developments during the quarter included increased aggregate foreign capital inflows by 61.2 per cent to US$5.53 billion. “In addition, the level of external reserves equivalent to 10.8 months of imports, exceeded the international benchmark

of 3.0 months while the BDC premium at 2.35 per cent remained lower than the threshold of 5.0 per cent and the external debt sustainability index remained at 0.1 per cent despite

the increase in the stock of external debt to US$5.99 billion at the end of March, 2012.

Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Yemi Adeoye Oscarline Onwuemenyi Franklin Alli Michael Eboh Ebele Orakpo Ifeyinwa Obi

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Group Business Editor Acting Finance Editor Energy Editor Head, Capital Market Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Energy Correspondent Energy Correspondent Industry Reporter Capital Market Reporter Energy Reporter Maritime Reporter

CONTRIBUTORS Princewill Ekwujuru Naomi Uzor Providence Obuh LAYOUT

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