Smuggled rice floods Nigerian market, as merchants suffer losses by Vanguard Media Limited

OCTOBER 7,

2013

Smuggled rice floods Nigerian market, as merchants suffer losses BY SUNNY IKHIOYA & GODWIN ORITSE

ice, Nigeria's staple food and most commonly eaten delicacy in parties, may not be available on the tables of most Nigerian families during the yuletide. This, according to Mrs Esther Olufumilayo, President, Rice Distributors Association of Nigeria, is because importers have

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CURRENCY BUYING CENTRAL 154.75 250.726 209.2375 170.9189 1.5865 0.3008 237.0687 RENMINBI 25.2727 RIYAL 41.2645 KRONA 28.0451 SDR 237.696 DOLLAR STERLING EURO FRANC YEN CFA WAUA

155.25 251.5361 209.9135 171.4712 1.5917 0.3108 237.8346 25.3548 41.3978 28.1357 238.464

stopped bringing rice into the country since the new tariff was introduced in January 2013. The old tariff of 35 per cent was okay and helped to check the activities of rice smugglers to a reasonable extent, as the duty was almost at par with that of Cotonou port. The government introduced the new tariff regime to encourage local production and help boost investorsâ&#x20AC;&#x2122; confidence in the rice industry. The policy seems to have backfired and helped to fuel smuggling activities along the Nigeria-Benin

border. Although rice import by land is prohibited, almost all the brand varieties in Lagos markets come in through land routes. Vanguard investigation revealed that three months to Christmas, there are no vessels awaiting rice discharge at the ports. This is an unusual situation and may lead to scarcity during the ember months. The resultant effect will be skyrocketing of prices. Official rice import has dropped as a result of the new price regime, but the

fact on ground according to Vanguard investigation is that smuggling of rice into the country has become big business. The local production that it was meant to benefit cannot flourish, as they cannot compete with the prices of smuggled rice from the land borders. Olufumilayo said for the policy to work, there must be effective policing of Nigerian borders. A visit to the Seme border showed that

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SELLING 155.75 252.3462 210.5896 172.0234 1.5968 0.3208 238.6006 25.4369 41.5311 28.2263 239.232

CBN Exchange rate as at 04 /10/2013

*Contributory Pension Scheme: Chairman, Investment and Securities Tribunal, Ngozi Chianakwalam (left), discussing with Acting Director-General, National Pension Commission, Chinelo Anolu-Amazu during an interactive workshop on contributory pension scheme in Abuja. Photo by Gbemiga Olamikan.

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18 — Vanguard, MONDAY, OCTOBER 7, 2013

Cover Story

*General Manager, True Tales Publications, Ms Anne Omezi, First Lady of Lagos State, Mrs Abimbola Fashola and Deputy Managing Director, UBA, Mr Kennedy Uzoka, during the official launch of Hello Nigeria in Lagos.

Smuggled rice floods Nigerian market, as mer chants suf merchants sufffer losses Continues from page 17 smugglers do not only bring in the commodity in bits and pieces, but use the creeks to ferry rice into Lagos. The Federal Government in a move to reduce rice importation into Nigeria jerked up the levy on rice from 20 per cent to 100 per cent while the duty was pegged at 20 per cent. Vanguard investigation showed that a creek linking the Badagry and Igando areas of Lagos has become a hot spot for smugglers as they load their vehicles with several bags of rice and ferry them into Lagos. Some brands of rice sighted by Vanguard include: Uncle Chef, Master Chef, Parro’t, and Reve Gold. These brands, it was gathered, are made in India. A trader who refused to give her name at the Iyana Eran area of Lagos said that rice made in India are less expensive than those from Thailand. She told Vanguard that the latest brand of rice - Chief Chef - goes for N8,000, while the Thai rice goes for between N9,000 and N11,000. At the Iyana Eran motor park, a major hub for smuggled rice, there is a large warehouse where the commodity is rebagged and re-packaged into smaller sizes. Vanguard sighted at the warehouse in Iyana-Eran motor park, printed bags of different brands on display for smugglers to buy and re-package and re-brand. Vanguard also gathered that the commodity is also adulterated and packaged in bags of other brands and brought to the market, thereby deceiving the unsuspecting public. Speaking to Vanguard on the ban on rice through the land borders, the National Coordinator of Transborder Traders Association, Alhaji Mikky Okunola, confirmed the imposition of a 100 per cent levy and additional 20 per cent duty C M Y K

in order to discourage rice importation and encourage local production. Okunola, however, explained that the imposition of the levy and duty alone cannot boost local production of rice. He added that a genuine intervention on the part of government in agriculture will boost local rice production that would feed the nation’s population. Some traders, who also spoke to Vanguard on the condition of anonymity said that the rice business in the neighbouring countries is booming, adding that smugglers are only taking advantage of it to eke out a living. Nigeria's Rice Business It has always been the same story. Government introduces a noble and well intentioned policy, but when it comes to implementation, it is fouled and muddled up in such a manner that a few carpet baggers extend their millionaire and billionaire status, while the majority of citizens are further impoverished. It happened with the fuel subsidy regime; it is now happening in the rice industry. The government raised duties for rice import from 35 per cent to a range of 110-120 per cent in the month of January 2013 with a view to encouraging local producers for industry growth and desired self-sufficiency for the nation. It was also intended to encourage investors in the rice business. For this to succeed, Nigerian borders must be secured from the activities of smugglers and local production must meet a significant part of the huge rice demand of the populace projected by USDA report to reach 3.1 million tons in 2013. A few key players in the industry importers, distributors, retailers, analystsare worried about government's

unpreparedness to see this policy through. Nine months into the tariff increase, there is palpable fear that many Nigerians may not be able to afford rice during the ember season because from what Vanguard discovered on ground; the policy of tariff increase has totally back fired. While the smugglers and border security personnel are smiling to the bank, major Nigerian key players in the business are gnashing their teeth. Nigerians are asking why well intentioned policies fail? Is it due to sabotage, faulty planning or ineffectiveness on the part of those entrusted with execution? Vanguard findings revealed the following: Market: A visit to the following major rice markets - Iddo, Daleko, Ketu, Mile 12, Alaba and Sango Ota, revealed the various brands of rice on display were imported. There was no trace of rice produced in Nigeria. Implication The statistics of Nigerian rice production is different from what is on ground. Our local production level is yet to make meaningful impact Apapa Wharf Also, a visit to Apapa Wharf revealed that there are no vessels carrying rice awaiting or discharging. It was the same situation at the Tin Can Island Port. If the two major ports are not expecting rice, where will the imported rice come from? Implication Importers have stopped bringing rice through the wharfs. On enquiry, it was discovered that rice vessels are being diverted to Cotonou port, including those earlier destined for Lagos ports. Importers Genuine rice importers are almost closing shops; they cannot compete with the prices of smuggled rice. The few who tried it at the new rates could not sell their products. Some of them now buy from smugglers to stay afloat. A few of them like GLOBAL and MILAN have left the country. Implication Joblessness for many Nigerians working in these companies, including their chain of transporters, distributors and retailers. Distributors These are the link between the importers and retailers. They cannot get goods to sell because importers are no more bringing in goods.The local rice producers cannot meet their demand. In fact, the President of Rice Distributors Association of Nigeria, Mrs Olufumilayo, confirmed to Vanguard that the local producers have not even established contact with them. Government The tariff that is supposed to be a revenue gain to the government has now become Continues on page 19

The Basic Guide to Starting Your Business Part 5 WHO IS AN ENTREPRENEUR? here are many differing views on what makes someone an entrepreneur and what an entrepreneurial venture is. The term itself is believed to have originated from French, coined by a French economist, JeanBaptiste Say, in about 1800, who defined an entrepreneur as “one who undertakes an enterprise , especially a contractor, acting as intermediary between capital and labour ”. But it was first defined in English by the Irish economist Richard Cantillon, as ” a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome”. The definition of entrepreneur is not limited, as various writers and world renowned entrepreneurs have given it various meanings. For instance, one of the great motivational speakers and writers of our time Robert Kiyosaki, in his book “ Retire Young, Retire Rich” defined an entrepreneur as “someone that sees an opportunity, puts together a team, and builds a business that profit from the opportunity”. As you can already see, the word entrepreneur is inexhaustible. According to the Merriam-Webster online an entrepreneur is “one who organizes, manages, and assumes the risks of a business or enterprise”. A more detailed definition given by Daile Tucker, an entrepreneur herself, who in her own words describes an entrepreneur as “a person who has decided to take control of his future and become self employed whether by creating his own unique business or working as a member of a team”. Something that keeps coming up about entrepreneurs is their ability to see opportunities

and make the most of it, not minding the risks they will undertake. Entrepreneurs are generally in competition with themselves and believe that success or failure lies within their personal control or influence. So it is very important for you, when starting a business, to be sure that you can identify opportunities, make the most of them and have the wherewithal to thrive even in the midst of risks and unforeseen circumstances and that is why carrying out a self analysis cannot be over emphasized. Entrepreneurs are leaders, prime movers, authors, pacesetters, investors and risk bearers. They are usually pioneers who strategize and formulate the rules for the general interest of the enterprise for others to follow. An entrepreneur conceives an idea and brings it to life through systematic and wellarticulated planning, driven by the passion and the need to achieve uncommon things. An entrepreneur not only assumes responsibility and the risk for a business operation with the expectation of making a profit, the entrepreneur also generally decides on the product, acquires the facilities, and brings together the labour force, the capital and production materials. Simply put entrepreneurs are people who choose to see positivity where negativity abounds. Bear it in mind, however, that if a business succeeds, the entrepreneur reaps the reward of profits; on the other hand, if it fails, he or she takes the loss. S u c c e s s f u l entrepreneurs are not perfect people but are brilliant, productive, and articulate; it takes both the heart and the head to successfully run an entrepreneurship. Also note that an entrepreneur is an inspirer, a motivator, a coach, a great listener, attentive, consistent and enthusiastic.

Vanguard, MONDAY,OCTOBER 7, 2013 — 19

n the last three months, local governments, states and federal government officials have been at each others’ neck over short falls in revenue allocation from the federation account. The war of words is as a result of panic by state governments that they may not be able to meet their obligations to their workers if the federation account allocation continues to dwindle. The current panic stems from the fact that if the revenue shortfall from the federation allocation committee to states falls below some levels, it will result in many of the states not being able to pay their employees. On two occasions, members of the committee from states have walked out on the Minister of State for Finance over the amount due for sharing. It is a shame that the committee members are not seeing the opportunity that the short-fall is offering them to think and act to remove their states from the shackles of oil. Before the discovery of oil, regions in the country had economy. They survived based on primary produce from the various regions. Nigeria will survive without oil. All that is required is for people to think. It is a sad story that the committee is not querying the Federal Government for not investing wisely, it is not asking for investment in the several minerals that dot the country, they simply bicker over sharing. It is the sharing of cheap oil money that makes Nigerian politicians dummies, men and women who cannot think. They only wait to share. It is sharing that makes ministers come to office and leave without making any impact on the economy. It is the same for presidents and governors who preside over a sharing formula and nothing else. Over the years they just become political bird of passage. It is the sharing of oil money that is tearing the PDP apart. It is sharing that has caused the sharp division in the country - North,South. If there was no oil revenue to share at the centre, the fight over the zone to produce the next president will not be a do or die affair. It is a shame that in the Nigerian political equation of today, none is thinking about how to make a

Nigeria will survive without oil, can we please think? bigger cake for all to share. While the bickering over sharing is on by clueless politicians and their co exploiters, it is important for the federal, state and local government functionaries to put on their thinking caps and fashion out how to generate internal revenue to sustain their operations. It will be foolhardy for government at all levels to continue to rely and plan on proceeds from oil sales. For a very long time, the signals have been showing the simple fact that this economy cannot continue to run on crude oil sales. Many of the states which commissioners of finance gather in Abuja to share from the federation account cannot generate up to N200 million per annum. Local governments are worse. Some cannot generate even a million naira a year. Yet, all gather in Abuja to share oil money. Delta State has had for a while, the slogan, Delta without oil. States and local governments that have caught the vision of a Nigeria without oil early enough, will use the resources at their disposal now to develop the real sector of their economy and a viable tax system to grow their revenue base. At the moment, states that cannot generate internal revenue to meet at least their recurrent expenditure, will be in serious financial crisis in the next few years. The federal situation is a little different in that it has the capacity to borrow. But that in itself has its own limitations.

Now that there is still room for action, state and local governments must embark on internal reforms that will enable them generate revenue that will make them less dependent on revenue allocation from the centre. The big problem here is that right now, federal, state and local government revenue officials have become mentally lazy. In fact, the nation’s leaders have become lazy all because of cheap petrodollar that is converted to naira. The ordinary Nigerian is a very hard working person. Farmers, traders and market women who have nothing to do with cheap oil money work hard for their daily living. But oil money sharing has enslaved government functionaries that all they do on daily basis is play the blame game. Instead of government officials creatively engaging the people in positive thinking and motivating the citizenry into productive ventures, it is

accusation and counter accusation. For instance, states have accused the Federal Government of misinformation and mismanagement concerning the federation accounts, including the failure of the NNPC to remit a whopping N2.983 trillion into the federation account in the last two years. They see the latest report on the federation account as a calculated attempt to confuse the public regarding the revenue accrued to the nation and give the impression that the government is under pressure to augment revenue shortfall, while in actual fact, the shortfall is as a result of poor management. Specifically, while the Minister put the revenue earned in the month of July 2013 at N497.98 billion, the Central Bank of Nigeria (CBN) economic report for the same period stated that revenue from oil rose by 0.2 per cent to N645.65 billion,

while gross non-oil receipt (corporate taxes, custom and excise duties and Customs' special duties) was put at N404.53 billion, a total of N1090.18Bn revenue which was higher than the budget estimate of N702.54 billion approved by the National Assembly for July 2013,” the committee said. The three tiers of government in the country have shared a total of N718.103 billion as federal allocation for the month of June 2013. They had shared N620, 656 billion as federal allocation for the month of May 2013. A breakdown of the allocation shows that the Federal Government got N294.038 billion (52.68%) as against N235, 778 billion it got in May; state governments got N149.140 billion (26.72%) compared to the N119, 590 billion they got in May while local governments got N114.981 billion (20.60%) as against N92.199 billion in May. The oil-producing states got a total of N52.230 billion as 13 % derivation revenue for the month of June compared to the N48, 874 billion they received last month. The war of words is about sharing; Nigerians should let the proposed national dialogue centre on Nigeria without oil, what is the way forward? Let us think more about developing a sustainable economy than how to share from a wasting asset whose future is uncertain.

Cover Story

Smuggled rice ffloods loods Nigerian mar chants suf markket, as mer merchants sufffer losses Continues from page 18 revenue loss. The government may claim credit for low rice importation, but the true situation, as Vanguard discovered, is that most of the rice coming into the country do not have Customs record because they are smuggled. They also are not checked for quality standards by agencies like NAFDAC and SON. The low import statistics is not a sign of success of the tariff programme, but an increase in smuggling activities. If all the various brands of rice in the market are foreign, genuine importers are not bringing in rice and land importation is banned, where did all the rice in the market

come from? According to PRAN (Patriotic Rice Association of Nigeria), quoted by Thisday Newspapers of May 24, 2013, “Lost revenue from imported rice from Cotonou amounts to N10 billion monthly but the Nigerian Customs Service's figure is put at N27 billion in four months…” We are talking about the month of May here; both quoted figures will triple in the ember months. Implication Government is losing revenue unnecessarily. Local Producers Local rice is not in the markets because at per unit cost of production, they cannot compete with the smuggled rice.

Vanguard investigation revealed that landing cost of Benue rice to Lagos is N17,000 and this excludes the cost of fine-tuning in form of separating the stones. Cotonou rice sells for between N9,000 and N10,000, how can the local producers compete? Implication A policy that is supposed to assist local production is now helping to kill it because of bad implementation. The Masses As usual, the masses will bear the brunt. In the ember months, demand for rice will increase as smugglers cannot meet the huge demand. Nigeria rice consumption is estimated in the region of 5.5 million metric tons. Genuine importers have

stopped importing; prices are heading for the top. The border security will have to be settled; they are happy, the Cotonou importers are happy. Conclusion From Vanguard investigation, it is clear that the policy lack proper execution. The Ministry of Agriculture is making efforts to see positive growth in rice production but it had to be done in phases for it to be effective. Government must also factor in key players like the Distributors Association through whom the rice gets to the desired markets. From Vanguard's findings, rice has become a staple food that any adverse effect on the populace will generate sentiments akin to the fuel price

increase. Concerned Nigerians say that it is important for those in authority to introduce an effective monitoring system on local rice production and consumption. As it is now, official statistics on rice importation cannot be relied upon. Nigeria, they say, should not be in a hurry to ban import or increase tariff to prove that we are working; we are only making a few people rich. Furthermore, they pointed out that security agencies entrusted with the task of securing Nigerian borders have failed. This, in their opinion, is outright sabotage and dereliction of duty. Continues on page 20 C M Y K

20 — Vanguard, MONDAY, OCTOBER 7, 2013

Business & Economy Continued from page 19 If the borders are not secured, this policy will not work. According to agric experts, it is important for the relevant authorities to institute inquiries and get guilty parties sanctioned where necessary. They suggested that in the interim, the duties on rice import should be reverted to the old 35 per cent. At this level, activities of smugglers will have minimal effects as the landing cost between Cotonou and Lagos will be almost same. They believe that it is still early correct these anomalies so that the people can have a peaceful and stress-free yuletide.

Interview

rs Esther Olufumilayo is the President of Rice Distributors Association of Nigeria and a key player in the Nigerian rice industry, as well as an importer and a major distributor. We had this interview with her. EXCERPTS: What is the situation of the rice business in Nigeria? Rice is a common food eaten by everybody and if care is not taken, there may be no rice by December. Why This is because of high duty and the activities of smugglers. Importers are losing as they cannot sell. If we are to follow the current duty, rice will cost about N16,000 per bag in the market and the Cotonou rice sells at between N9,000 to N10,000. Some of us that imported rice at the new rate could not sell our products. What then can be done? Our problem is the border. Government cannot stop it because the people they put at the border are fighting for their own interest. Cotonou is gaining and Nigerians are suffering. The actions have caused so many job losses in the business. Importers are closing shops and we are talking of reducing employment. Again, what I can say is that enough homework has to be done by government before such decision to increase tariff can be taken. From what we have seen, not enough home work has been done. I am the president of Rice Distributors Association of Nigeria and also, an importer, I have only been hearing about local production. Nobody has consulted with us on how the local production can come into the market. In fact, we only hear about them, we do not see them. My solution for now is that government should revert to the previous 35 percent. This will minimise smuggling because the duty will almost be at par with that of Cotonou.

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Nigeria, EU bilateral trade hits N8.4trn in 2012 By HANNAH ISIBOR

he Minister of Trade and Investment, Mr. Olusegun Aganga, has stated that bilateral trade between Nigeria and the European Union (EU) reached 40 billion euros (about N8.4 trillion) accounting for almost a third of Nigeria’s total trade with the rest of the world. Aganga who was represented by Director of Legal Services Federal Ministry of investment, Uju Hassan Baba disclosed this at the 2nd European Union (EU)-Nigeria Business Forum: ‘Forging Partnerships in Africa’s Economic Powerhouse’ held in Lagos yesterday, said that the European Union’s stock of Investments in Nigeria exceeds 30 billion euros. Speaking further, the minister explained, “We therefore view our relationship with the EU as strategic and essential to our national growth.

From left: Alhaji Umaru Kwairanga, Chairman, Ashaka Cement PLC; Mr Jean-Christophe Barbant, Outgoing Country CEO, Lafarge Nigeria; Mr Guillaume Roux, Incoming Country CEO, Lafarge Nigeria and Chief Olusegun Osunkeye, Chairman Lafarge WAPCO at the Lafarge in Nigeria Country CEO's Turn Over Ceremony held in Lagos. Beyond trade, Europe has historically been the largest source of foreign direct investment into Nigeria. EU interests in Nigeria cut across a diverse range of sectors including upstream oil and gas, telecommunications, financial services, fast moving consumer goods,

infrastructure among others.” Adding that as European business explore opportunities in the Nigeria and regional market, government is addressing three key pillars to attract investments and improve competitiveness in the country which include ensuring macro stability,

Old Mutual to invest N9.2bn in Nigeria, West, East Africa BY PRINCEWILL EKWUJURU

ld Mutual Nigeria, a subsidiary of Old Mutual Group, a South African insurance firm engaged in the provision of life and general insurance policies, said it is investing about $600 million (N9,240,000,000) in Nigeria, and in other parts of West and East African insurance markets. The firm disclosed this through its Chief Executive Officer for West Africa, Offong Amah, at the maiden press briefing of the firm to announce its arrival in Nigeria insurance sub-sector of the economy six months ago. The CEO said the company ’s opening in Nigeria is a critical part of its expansion strategy in West Africa. Amah who said the company which completed the acquisition of majority stake of Oceanic life from Ecobank Transnational Incorporated, ETI, said it would be investing $600

million across East and West Africa of which Nigeria is a critical part of that expansion strategy. According to him: The roll out of old Mutual Nigeria forms part of the strategic priorities of the group in its expansion drive in West Africa He went on to say that Old Mutual Nigeria’s objective is to work wit existing insurance companies and the regulator to broaden and deepen the insurance market in Nigeria. “This we plan to do through the introduction of innovative products, financial education and reaching out to the underserved and unserved segment of the market. A critical part of this, is tackling the skepticism of many Nigerians regarding insurance which we are addressing through the prompt settlement of claims and excellent service delivery amongst others.” Ambah said. He said further that Old Mutual Nigeria would be combining local resources and skills at its disposal and leveraging off the Old Mutual Group capabilities and experience around the world. The CEO while affirming the

company’s commitment to its group value said that it is committed to being a customer centric company which operates responsibly, provides solutions to address the savings, protection and investment needs of its customers and is supportive of the community in which it operates by contributing positively to its development.

having competitive governance and regulations, and enhancing nation’s infrastructure. On the issue of macro stability, which forms the bedrock on which everything else is built, he said that Nigeria remains a strong and stable destination for investment for investments. Saying that the macroeconomic growth has consistently averaged 8 per cent in the last 10 years as Nigeria have one of the lowest debt to GDP rations in the world and inflation is single digits. Also on the macro front, he said that to further promote regional economic integration within the West African region, Nigeria has been working with its peers in ECOWAS to actualize a Common External Tariff regime (CET) next year.

AMfB builds team spirit with staff tournament BY PROVIDENCE OBUH

o foster team spirit among its staff, Accion Microfinance Bank Limited, (AMfB) held its maiden edition of Annual Staff Tournament. Scrabble was selected for the tournament with 16 teams drawn from the bank’s 19 branches and Head Office. Elimination stage saw the emergence of eight teams that will compete at the next stage holding on Saturday, October 19, 2013. In a statement made

available to Vanguard, signed by Mrs. Oluwayemisi Mafe, “the tournament is proposed as an annual event geared towards building team-spirit among AMfB’s employees. “This is premised on the belief that team work fosters efficiency that builds healthy competition.” Meanwhile, AMfB incorporated in May 2006 to carry on microfinance banking business, currently operates from 19 branches spread across Lagos State and has disbursed loans well over N19 billion and has a customer base of over 100,000.

Vanguard, MONDAY, OCTOBER 7, 2013 — 21

Business & Economy BRIEFS Twitter plans to raise $1bn in IPO

From left Louis Jordan, Chief Financial Officer, Old Mutual Nigerial; Mojisola Odanye, Commercial Director; Offong Ambah, Group Chief Executive and Keith Alford, MD/CEO during a media briefing by the executives of Old Mutual Insurance on the activities of the company.

BY IFEYINWA OBI

ommercial activities at Nigeria’s premier seaport - the Apapa Port Complex - were shut down last week by protesting retirees of the Nigeria Port Authority (NPA), whose services were severed in 2006 after the port concession regime. The former NPA workers, who staged a peaceful protest at Apapa Port gate were said to have been paid severance benefits. However, they claim that they were supposed to be also absorbed in the authority’s

Protesting NPA retirees shut down Apapa port pension scheme. Tensions are already going high as some dock workers seek to enter the port for their daily job, saying the ex-NPA workers cannot stop them from doing their own jobs. However, the Nigerian Police are at the scene of event with squad of mobile police officers to ensure that peace prevailed. The aggrieved pensioners had on

Wednesday threatened to disrupt port operations in various ports formations in the country. The National Chairman of the 2006\2007 retired staff of the agency, Mr Charles Ayo Binitie, who addressed the newsmen disclosed that the mass protests will be total until the management of NPA adhere to their request. He said that in Lagos Ports,

Workers shutdown Costain West Africa over unpaid salary BY KELECHI AZUBUIKE

agos- Protesting workers of Costain West Africa PLC, a Nigeria-based company engaged in the development of business solutions and technologies have shut down the operations of the company over alleged unpaid salaries. According to the aggrieved workers, the management of the company has refused to pay their salary arrears for the past three to four months and displayed several placards with inscriptions such as “Pay us our 38 months pension and salary, fellow Nigerians come to our aid to redeem the image of our dear company from kareems family”. Speaking, Mr Joseph Chika Nkwocha, one of the leaders of the protesting workers said: “The Management is owing us one gratuity that has C M Y K

been calculated, pension scheme deducted three and half years not remitted, retirees he has not paid a dime, Union dues he gave a bounced cheque to NUSAMU headquarters Alimosho, tax he did not pay.” “The management indulge in the process of delaying our salaries early last year and even threatened with reduction of staff which was eventually averted after making the Lagos based staff to sacrifice the deduction of about 15% (senior staff) and 10% (junior staff) respectively for about three months to keep our jobs . There after the situation improved and they later carried out the reduction in staff strength and sustained as the case maybe periodically.” “The situation worsened at the beginning of 2013 when salaries were delayed for three month without recourse that staff have children and wards to send to schools or other

social essentials to meet up like rents and medical bills. Since then, staffs of Costain have had to beg and appeal for payment of their salaries from the management on a monthly basis and even seek assistance elsewhere to keep and maintain their parental responsibilities at home.” “What is prevalent now is that staffs of Costain last received their salaries in the month of August 2013 which was for May 2013 and have not been considered for any payment since then despite appeals and meetings held by our respective National Unions to see progressive and meaningful ways of preventing a breakdown in relationship and also to protect workers in Costain. Equally our colleagues who have been retired on account of age and staff reduction have been unpaid their gratuities for the past four years and still counting without news on when their payments will be redeemed.

the pensioners will form a human barricade along the ports access road in a bid to stop evacuation of cargo from the port. Binities said the same action would be replicated in Onne Port, Warri Port and Calabar Port. He declared that they were denied their benefits by the NPA management through the Presidential Task Force. “For the purpose of prosperity, what shall we tell our children and those to come? That we worked in NPA for 10 to 35 years and by the decision of a Presidential Task Force, we were denied our pension” he lamented. The pensioners said they are entitled to pension for life because they fall within the old pension scheme, especially the Federal Government circular of August 3, 2009. ‘We are demanding the 10 percent gratuity and pension as compensation for premature retirement. We are also demanding for one year salary as compensation for those disengaged employees, who did not complete the minimum qualifying period for gratuity and pension”, the pensioners declared. They also said the NPA management should pay them repatriation allowance as was done in the case of 2008 disengaged employees.

ocial networking company Twitter has said it plans to raise $1billion in its stock market debut in documents filed with US regulators. In the filing, revealed last week, the seven-year-old company said that it now has 218 million monthly users and that 500 million tweets are sent a day. It made a loss of $69 million in the first six months of 2013, on revenues of $254 million. It will be the largest Silicon Valley stock offering since Facebook’s listing in 2012. Analysts said that the offering was likely to get a good response. “Social media is red hot,” said Internet analyst Lou Kerner. “Twitter is front and centre benefiting from market enthusiasm for all things social, and remarkably strong metrics.” The filing also revealed Twitter’s finances for the first time. While the company has never made a profit, its revenue has grown from just $28 million in 2010 to $317 million by the end of 2012. Around 85 percent of Twitter ’s revenue last year came from ad sales; the rest was from licensing its data. The company takes in a significant portion of its ad revenue from mobile devices, an important metric often tracked by analysts.

‘Proposed National Conference will address concerns in PIB, solid minerals’

ublish What You Pay (PWYP), an NGO, has said that the proposed National Conference may help to address Ms Faith Nwadishi, National Coordinator, PWYP and a member of the National Stakeholder Working Group of the Nigeria Extractive Industry Transparency Initiative (NEITI) said this in an interview with the News Agency of Nigeria (NAN) in Abuja. President Goodluck Jonathan had on Wednesday announced the setting up of a committee to propose modalities for the convening of a National Conference. Nwadishi said the conference would provide opportunity for Petroleum Producing Communities and other stakeholders in the oil, gas and extractive industry to contribute meaningfully to the passage of PIB.

22 — Vanguard, MONDAY, OCTOBER 7, 2013

Banking & Finance BRIEFS Equitable distributions of resources to curb nation’s woes BY PROVIDENCE OBUH

here are enough resources in Nigeria that would go round if well distributed to Nigerians, Managing Director Rwells Media, Mrs. Jibe Ologeh, has said. Speaking at the Independence Day celebration, marking rd Nigeria’s 53 birthday, Ologeh made this position known , saying, equitable distribution of resources does not make any citizen more Nigerian than the others. She urged the leaders to go back to the drawing board and implement policies that will engender fairness that will make the Nigerian people feel important and cared for. “ Give social welfare policies that will make Nigerians proud of their country. A proper value should be placed on Nigerian by the leaders. “That you are a politician or a President, Governor, Law maker or law enforcement agent, does not make you more Nigerian than the other people, we are all Nigerian we should show respect for the nation Nigeria by showing respect to Nigerians as individual and to one another so that there will be peace “Those in authority and the corridors of power should respect the other Nigerians, ensuring that the resources of the nation get to everybody. If this happen, you will not have people doing Boko Haram, Kidnapping and armed robbery, let us come together and respect one another as Nigerians, make sure that the resources goes round to everybody in this country, there is enough for everyone in Nigeria we don’t need to pay N10 million to send our children to school abroad.”

ICSAN holds conference Nov 5

HE Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) will hold its 37th Conference between November 5 and 6 at the Lagos Sheraton Hotel and Towers, Ikeja. According to ICSAN’s Registrar/CEO, Mr Dele Togunde, the conference has as theme: “The Interplay of Risk Management and Compliance Issues in Corporate Governance.” C M Y K

Human effort critical to fighting poverty — World Bank Stories By PETER EGWUATU

he World Bank has acknowledged that human effort is very critical in the fight to end poverty. The World Bank stated that in the face of social unrest, economic crises, and more frequent natural disasters, preparation and recovery efforts by governments, communities, and individuals have become increasingly essential. According to the World Development Report 2014, titled Risk and Opportunity: Managing Risk for Development, adverse shocks - above all health, weather shocks, and economic crises - play a major role in pushing households below the poverty line and keeping them there. The report concludes that managing risks responsibly and effectively can save lives, avert economic damages, prevent development setbacks, and unleash opportunities. Risk management can be a

From left: Managing Director, Fidelity Bank Plc, Mr. Reginald Ihejiahi; Central Bank of Nigeria (CBN) Deputy Governor, Operations Directorate, Tunde Lemo and FCMB’s Vice President and Group Head, Project & Structured Finance, Robert Grant, at the special forum on Financing the Power Sector Reforms for Economic Development, in Abuja over the weekend. powerful instrument for development, bringing security and the means of progress to people in developing countries and beyond. Over the past 25 years, the world has experienced rapid

integration, economic reform, technological modernization, and increased democratic participation, but has also endured financial turbulence, job and income loss, and environmental damage. The WDR contends that, rather

than rejecting change in order to avoid risk, people and institutions need to prepare for the opportunities and risks that accompany change.

NSIA appoints Stanbic IBTC as custodian of SWF

he Nigeria Sovereign Investment Authority (NSIA) has appointed Stanbic IBTC as the local custodian of the Nigerian Sovereign Wealth Fund (SWF) .This appointment was made following a rigorous exercise by NSIA. Stanbic IBTC’s experience and it’s track record of providing integrated securities services solutions form a key part of the reason for this selection. Stanbic IBTC’s role as local custodian of the Sovereign Wealth Fund, which is the third largest Sovereign Wealth Fund in Sub-Saharan Africa, embraces safekeeping, settlement and other related services for assets in the region of $1 billion. Stanbic IBTC’s appointment will complement NSIA’s appointment of other fund managers for the Sovereign Wealth Fund. Mr. Segun Sanni, Head of Investor Services at Stanbic IBTC, expressed his delight at the

appointment.”We are deeply gratified by NSIA’s appointment of Stanbic IBTC as its domestic custodian.This is another strong validation of our leadership position in the Nigeria custody space and the thoughts, efforts and resources we invest in

constantly pushing the frontiers of the value we bring to our clients.” Speaking further on the appointment, Mr. Mark Kerns, Global Head of Investor Services for Standard Bank, the parent company of Stanbic

IBTC, also commented on the appointment of Stanbic IBTC in Nigeria. “As local custodians of the Sovereign Wealth Fund in Nigeria, we welcome the opportunity to work with NSIA and its other financial partners.

Heritage Bank advocates solid framework to grow SMEs

oncerted promotion and protection of Small and Medium Enterprises (SMEs) through the establishment of a solid framework supported by clearly articulated government policy is the first step in creating an active Small and Medium Scale Enterprise SMEs sector that could spearhead the much needed revolution Nigeria and indeed Africa urgently requires in the area of building the next generation of African corporates. This was a major submission of the Managing Director/ Chief Executive Officer of Heritage Bank, Mr. Ifie Sekibo, who was a guest Speaker at the 2nd US-Africa Trade & Investment Forum/

Africa Investment & Development Awards which took place on 25th September 2013 at St. Regis Hotel, New York, USA where he was selected to speak as an authority on “Small & Medium Enterprise Funding in Africa - a banker ’s experience”, on account of what the organizers described as the outstanding efforts of the new Heritage Bank in the area of SME Banking in Nigeria. The Heritage Bank helmsman observed that in Sub-Saharan Africa, SMEs are more credit-constrained and this typically affects growth possibilities as significantly low number of start ups who apply for financing actually

succeed. Studies, he noted, indicate that more than 70% of the SMEs lack access to medium-longer-term finance, creating an SME funding gap of more than $140 billion in Africa alone. “Using Nigeria as a case study, between 2003 and 2009, SME loans as a percentage of total credit, decreased from 7.45% to 0.18%. Yet by 2012, Nigeria had about 17.6 million MSMEs employing about 32.4 million people. Although it is generally accepted that SMEs enhance competition and entrepreneurship, and their development has a positive impact on innovation and productivity.

Vanguard, MONDAY, SEPTEMBER 30, 2013 — 23

24 — Vanguard, MONDAY, OCTOBER 7, 2013

Corporate Finance BRIEFS Global stocks, dollar fall as US shutdown enters third day

ajor stock markets fell while the dollar dropped to an eight-month low on Thursday with no end in sight to the budget fight in Washington that has shut down the government for a third day. Worries also grew about the more important battle over the U.S. debt ceiling in coming weeks, sending U.S. onemonth Treasury bill rates to their highest level since November. Failure to raise the $16.7 trillion borrowing limit by October 17 will lead to a U.S. default and roil global markets. Market volatility could rise if the deadlock continues as concern about the economic impact mounts. Goldman Sachs estimated a short-term shutdown would slow U.S. economic growth by about 0.2 percentage point, while a weeks-long disruption could weigh more heavily - 0.4 percentage point - as furloughed workers scale back personal spending. President Barack Obama met with Republican and Democratic leaders in Congress late Wednesday to try to break the budget deadlock that has shut down wide swaths of the government, but there was no breakthrough and both sides blamed each other.

Unilever plans new manufacturing plant in Kenya

nglo-Dutch consumer goods firm, Unilever said it plans to invest 150 million euros ($203.9 million) in a new manufacturing plant in Kenya that will help it access the east African market. Unilever ’s Global Chief Executive, Paul Polman, said the firm’s planned investment will cater for the company’s expanding interests in the region, including in Ethiopia and Tanzania. Polman met Kenya’s President Uhuru Kenyatta at State House Nairobi, as part of a visit to review his company’s interests in the country and consult government and business leaders. He said his company has identified Kenya as one of the three strategic hubs in Africa, alongside Nigeria and South Africa. The London listed company already operates seven tea factories in Kenya’s north-rift district of Kericho and it buys an estimated 30 percent of the commodity from farmers. Tea is the country ’s leading foreign currency earner.

From left: Ifori Layague, Director, Governance Risk Compliance Service, PWC; Yetunde Oni, Head, Local Corporate & Client Coverage, Standard Chartered Bank; Cyril Azobu, Partner, PWC; Ebehijie Momoh, Head, SME Banking, West Africa, Standard Chartered Bank and Carol Oyedeji, Regional Head, Consumer Banking, West Africa, Standard Chartered Bank, during the SME clients’ Financial Management Training organised by Standard Chartered Bank in partnership with Price Waterhouse Coopers in Lagos.

Stockbroker urges SMEs to leverage NSE advisory services for growth Stories by NKIRUKA NNOROM

mall and Medium Scale Enterprises, SMEs, have been enjoined to take advantage of advisory services being offered by capital market operators to groom their businesses preparatory to listing on the stock market. Alhaji Ola Yussuff, former president, Association of Stockbroking Houses of Nigeria, ASHON, and Managing Director/CEO, Trust Yield Securities Limited, who made the call, blamed poor representation of companies in the sector on the Nigerian Stock Exchange, NSE, on their reluctance to pay the fees attached to the services. Yussuff said that instead of shying away from this service, the owners of such businesses should engage the services of stockbrokers, who would mentor them on how to structure their production and finances for enhanced growth. In his word, “Even if they cannot list now, a kind of programme has been designed for them, a mentoring programme, whereby if as an SME and the company cannot meet the requirement to be listed on the second tier market, it can embrace the service of stockbroking firm that will guide it on how to prepare its books; how to articulate its

market and even on how to protect itself. By the time the company does this for a period of two to three years, having been already mentored, it will be ready to meet the requirements that will qualify it to be listed. “The stockbrokers are not doing this to enrich themselves; they are more particular about the relationship with the hope

that such business will grow tomorrow. But they charge a token fee just to reflect the efforts they have put into nurturing such company.”

ontinuing, he said, “The provision is there for the SMEs to come and list. If you look at the structure of the Nigerian Stock Exchange, you see that there is first and second tier markets. The

second tier is a way of saying to SMEs, may be you might not be able to meet the same entry requirements as UAC and Unilever; therefore you can take advantage of an entry requirement that reflects the SMEs position. It is a way of them coming into the market as a second tier company and as time goes by, they can move into the first tier.” “Apart from the structural provision that is made for them, we also see that the Securities and Exchange Commission and the stockbrokers are all going out, trying to encourage all these SMEs, trying to educate them on why they should embrace the capital market.” It will be recalled that the NSE had earlier this year launched the alternative securities market to cater for small and medium sized companies. With ASEM, provision was made for SMEs to raise low cost, long term funds from the capital market without the usual difficult requirement for access and post listing. Anticipating possible challenges on the implementation of the new programme, the Exchange had selected qualified dealing members as Designated Advisers. Consequently every company aspiring to list under ASeM must have a Designated Adviser whose role will be to provide professional guidance to the company. The Designated Advisers will ensure that the companies listed on ASeM comply with all the requirements and obligations of the Alternative Securities Market.

Wema Bank set to upgrade to national bank status *Raises N40bn tier 1 capital

ema Bank Plc said it will apply to the Central Bank of Nigeria, CBN, for a National Banking licence having exceeded the N40 billion minimum required capital of operating the banking model. The Managing Director/ CEO, Mr. Segun Oloketuyi, who disclosed this, said that the bank will commence the process of securing the licence in the next few months. The decision, according to a statement from the bank followed the successful completion of its N40billion special placing and subsequent allotment of shares and approval by the Securities and Exchange Commission. Kemi Aina, Head, Brands & Marketing, said with this approval, a total of 26.67 billion ordinary shares of 50k each

valued at N40 billion were allotted to successful institutional and private investors at N1.50k per share in two tranches. She stated that the additional shares have raised bank’s paid up capital above the threshold for a National Banking Licence. Speaking on the special placing process, Oloketuyi thanked all stakeholders for their support towards ensuring the success of the capital raising drive which began a couple of months ago. He further thanked shareholders and customers especially, who kept faith with the bank through the ongoing transformation process and reiterated the Board and management’s commitment to ensuring that the bank regains its pride of place in industry without compromising on

values and standards. ”With this development, the shareholding structure of the bank remains diverse with no single investor having a controlling shareholding in the bank. Over the past four years, Wema Bank has been successfully repositioned against all odds by creating a strong platform for sustainable superior financial performance through quality personnel, better risk management and corporate governance principles, improved systems and processes, and an enhanced capital base,” he added. In its 2013 half-year results, the bank reported a half-year profit before tax of N481 million, a validation of the efficacy of its repositioning programme, a trend expected to be sustained into the future.

Vanguard, MONDAY, OCTOBER 7, 2013 — 25

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26 —Vanguard, MONDAY,OCTOBER 7, 2013

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Vanguard, MONDAY, OCTOBER 7, 2013 — 27

Sept. 27 - Oct. 03 2013

Business & Economy

From left: Cutting the ceremonial cake are Chief Doja Adowolu, Oba Lamidi Adeyemi the Alaafin of Oyo, Iyalode Alaba Lawson, Mrs. Funsho Amosun, Ogun State First Lady, Oba Kehinde Olugbenle the Olu of Ilaro Olori Olugbenle and Ogun SSG, Barrister Taiwo Adeoluwa during the presentation of woman of Integrity award to Iyalode Alaba Lawson on his elevation as the 2nd National Deputy President of NACCIMA by Fortune Class Magazine.

NASD assures investors of safety of shares at OTC market *Targets 60 stockbroking firms by Dec By PETER EGWUATU

nvestors have been assured of the safety of their shares that are not listed on the Nigerian Stock Exchange, NSE as the National Association of Securities Dealers (NASD) Over the Counter (OTC) market platform has been positioned to provide liquidity for investors that had invested in public entities that are not listed on the Exchange. Also, 15 additional stockbroking firms are being targeted to be registered with the NASD Plc before the end of the year, 2013 to bring the total number to 60. Speaking to newsmen in Lagos over the progress made so far by NASD since the market was launched in July this year, the Managing Director/Chief Executive Officer, NASD Plc, Mr. Bola Ajomale assured investors of the safety of their shares being traded on OTC market, saying “So far we have 45 registered stockbrokers with the market and we are hoping that additional 15 will join before the end of the year. Already 10 out of the 15 firms are expected to join in few days time. We have also six registered securities and there are two other companies that are in the pipeline to join and trade freely in the platform. They are Swop Technology and BGL Plc.

Already, out of the six securities that are already registered in the platform, three are active and they are WAMCO, Food Concept and IGI Insurance.” Continuing, Ajomale said, “The NASD OTC market is an alternative market to the NSE, hence should not be misconstrued to be an issuer market. The NASD OTC market is an investor market and not an issuer market. The companies whose shares are being traded in NASD OTC market are not listed or quoted in the OTC platform. So, any investor who wants to sell its shares at the OTC will determine the price it

wants the shares to be sold: Similarly, an investor that wants to buy will also determine the price it wants to buy a particular share. So the process continues until sellers and buys desires are met at an equilibrium price.” While commenting on the statistics of operators on the NASD OTC market, Ajomale said, “We have 17 Issuing Houses and 10 are expected to join before the end of the year 2013. Though, it is not the figures that matters but the velocity of deals that we should be concerned with. We are hopeful that the market will rise as investors become aware of its benefits.

Oteh urges govt to fund infrastructure through capital market

he Director General, Securities and Exchange Commission (SEC), Ms. Arunna Oteh, has emphasized the enormous potential in the capital market as a funding engine for infrastructure projects . Oteh, who spoke at the 38th Annual Conference of the International Organisation of Securities Commissions (IOSCO) with theme “Connecting Global Finance” said, “ The capital market is an avenue for wealth creation” The SEC DG, who was a panelists at the conference also observed among others, the need for jurisdictions to employ

sound regulatory framework as a major source of comparative advantage as investors and issuers will be attracted to markets with quality regulation. The opening ceremony of the conference featured a string of highprofile speakers with Jean-Claude Juncker, the Prime Minister of Luxembourg delivering the keynote address, while Jean Guill, Director General of the Commission de Surveillance du Secteur Financier (CSSF), Luxembourg, Greg Medcraft, Chair of the IOSCO Board and David Wright, IOSCO Secretary General, delivered welcome remarks. C M Y K

28 — Vanguard, MONDAY, OCTOBER 7, 2013

Vanguard, MONDAY, OCTOBER 7, 2013 — 29

Interview

—Akinwumi Adesina BY EBELE ORAKPO

ince men have learnt to shoot without missing, Eneke the bird has learnt to fly without perching. This seems to be the approach adopted by Nigeria’s urbane Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina to tackle head-on the rot in the sector and transform agriculture into money-making venture. In this interview with Vanguard in Abuja, the minister speaks on the efforts of his ministry to ensure that Nigeria becomes not only self-sufficient in food production but also a net exporter of food. He says they are making agriculture attractive to youths which will curb rural-urban migration, tackle corruption and create jobs. Talk of killing many birds with one stone! hen it comes to the issue of Excerpts: agriculture, we have a huge potential. Nigeria has 84m hectares of ir, when you came up with the arable land but only about 40 per cent idea of cell phones for is cultivated today. If you look at the farmers, not a few people criticised the idea but the idea seems to be level of cultivation, may be no more working. Could you tell us more than 10 per cent of it is cultivated right now. We have two of the largest rivers about the Electronic Wallet (e-wallet) in Africa - Niger and Benue, and if system and how it works? there is anything that crops like, it is The backbone of any agricultural water, we have about 263 billion cubic revolution is access of farmers to metres of water so water is not our modern agricultural inputs, especially problem and we have cheap labour. fertilisers and seeds. The old system We have land, water, rainfall and of government buying and sunshine so Nigeria has no business distributing fertilisers was very importing food, Nigeria has the corrupt as only 11 per cent of farmers potential to be a net food exporter. got the fertilisers. Rich and powerful Potential land is there but nobody can political elites siphoned off the eat land, we have to turn it into income fertilisers belonging to poor farmers. for people. That was why when we Between 1980 and 2010, over N873 started, President Jonathan said; billion was spent on fertiliser “Look, get agriculture right for me,” subsidies with only 11 per cent of and we said we have to get agriculture farmers getting the fertilisers. People done as a full-time business. Whether will sell sand to government and in a you are a small, medium or large scale lot of cases, nothing was supplied but *Dr. Akinwumi Adesina... Nobody drinks oil or smokes gas but everybody eats food..., we should be farmer, if you produce what the market they got paid. So about N776 billion producing and processing food for our 167m population wants, when the market needs it and was siphoned off the system through at the price the market wants, you twice the yield you get in the rainy corruption, an average of N2.6 billion important; two states of Nigeria trading in what insecticide action so the advantages of a BT annually. It took us 90 days to end make money. Gone are the days when season. is produced, processed and consumed in cotton are; one, you are not spending money agriculture is some kind of backwater. that corruption just to let you know Why is that? Nigeria as opposed to buying it from India or on chemicals, two, it improves the health of Agriculture is the front and centre of how serious the President is about This is because diseases are much Thailand. the farmers because they are no longer the economy, a money-making lower and you don’t have insects, solar doing things right. We launched the Fourteen large-scale integrated rice mills exposed to chemicals which cause venture. Growth Enhancement Scheme (GES) radiation is much better so your grain were established by the private sector in just headaches, diarrhoea and all kinds of to provide subsidized inputs to filling is much better. The only two years, producing international quality pulmonary diseases. It also saves money as et me talk about some of the crops problem you are going to have is birds long-grain parboiled rice, tastier and healthier farmers. To reach them directly with cost goes down because the profitability for we have in the north. seeds and fertilisers, we developed because they have great view. than the 15-year-old imported rice dumped on the farmer goes up; it is a biotechnology so Rice: Nigeria used to be the largest the e-wallet system which allows We went into dry season cultivation the Nigerian market. we are regulating the testing of the Cotton: Nigeria used to be the largest farmers to receive subsidized importer of rice in the world. We have with 267,000 farmers all using their technology because you have to do risk electronic vouchers for their seeds and just been overtaken by China. mobile phones to get seeds and producer of cotton in West Africa and behind management and all that. I find it very strange and unacceptable that Nigeria is the fertilisers on their mobile phones. Whether gold or silver medal, we are fertilisers across 10 states in the north. us were Mali, Niger and Burkina Faso but only country that exports cotton that does Nigeria is the first in Africa and not proud of this. We embarked on a They produced 1.1 million metric tons today, these three countries are the largest of paddy rice; one third of the entire producers of cotton which I find totally not have BT technology so we decided to possibly in the world, to develop the major effort to extricate Nigeria from bring in BT cotton. We are testing it in the e-wallet system for targeting farmers decades of dependency on rice paddy we need to be self-sufficient as unacceptable. So we have started to revive the north and we are getting very good results. with subsidised farm inputs. We don’t imports. We set a target of being self- a country. We did it in one single dry cotton system in the north. Last year, we gave season and we estimate N77 billion in 1,596 metric tons of high-yielding cotton seeds need any middleman. Last year, we free of charge to about 38,000 farmers which Sorghum: Nigeria is the largest producer reached 1.5m farmers and that sufficient in rice by terms of gross value they planted on 756,000 hectares of land in 10 Potential land is of food sorghum in the world (produces 2015 and we are well impacted 7m persons. This year, we added into the states across the north and they harvested about 9.3 million metric tons) and the US is have reached 3.7m farmers just this on our way to there but nobody economies of those 240,000 metric tons of cotton. the largest producer of feed sorghum in the season and we still have the dry achieving this goal. states. In addition, world but the US produces millionaires while can eat land, we With vast amount of season to go. We expect to exceed 5m the dry season What is BT cotton and how is it going Nigeria generates poverty, why? The reason irrigated land in the farmers and that will impact 25m have to turn it farming alone created to improve Nigeria’s economy if deployed? is that we are not creating market for such; north, Mr. President people by the end of the season. The about 466,000 farm Science is everything in agriculture because we are growing sorghum almost like a supported us and gave into income for e-wallet system has come to stay, that jobs and some of them in agriculture, it is about increasing subsistence crop. We decided to change that us funds to go and do is what the National Assembly dry season rice permanent jobs. Lagos productivity so that you reduce the amount of people; that is as part of the Agricultural Transformation State has a rice mill land you are clearing. That is where you have members who were at the public farming, first time in Agenda. We set up a sorghum why when we and bought 17 trailer sustainable productions in the system. If your hearing had to say. People are not history that the transformation value chain from end to end, loads of paddy rice yield is low, you will be cutting down trees to selling sand to us anymore; if you sell Federal Government finding market for the sorghum and then started, President from Kebbi State grow more cotton. With BT cotton, we don’t sand to the farmers, you will feel it will do dry season rice working backwards to create the market for Jonathan said: where we have need to. BT cotton is a technology that allows yourself. farmers. The North-West and North-East production as a matter unleashed a rice you to avoid spraying pesticides on your cotton What are your plans for the of policy. It made sense zones produce 85 per cent of the sorghum “Look, get revolution. Lagos and it is a genetic modification (GM) northern part of Nigeria in view of as far as I am in the country but the same areas have the its huge untapped agricultural concerned because agriculture right processes that into Eko technology but it is based on just a particular highest level of malnutrition and wastage. Rice and sell in Lagos. bacterium called Bacillus thurigiensis (BT). It potential? It doesn’t make sense and so we decided to you see, in the dry for me For me, that is produces a toxin in the plant which has turn sorghum into high income crop for season, you get almost

Do you have plans for fruits and fresh produce export? Nigeria has a huge potential for horticulture. Nigeria is the largest producer of pineapples in Africa ( over 900,000 metric tons), South Africa produces a little over 35,000 metric tons but we import pineapple juice from them. Nigeria is the second largest producer of citrus in the world, second only to China, but we import orange juice. We are the largest producer of tomato, but we import tomato paste. None of these things make sense. We, therefore, started an a g g r e s s i v e programme to produce and process here, to add value here and do import substitution and it is working. As I am speaking to you now, Dansa Foods has put up $35 million to set up a tomato processing plant in Kano that will process the tomato

We aim to unlock agricultural potential to drive economy

farmers. We worked with Dansa Foods Limited and last week, they announced that they will be investing 36 million euros (about $48 million) in a high energy food plant which will be the largest energy food plant in Africa. They will use the sorghum, maize and soybean to make high energy foods. The World Food Programme which is world’s number one UN agency for distributing emergency food, buys 98 per cent of their high energy food from Asia and when the food gets here, it is not appropriate, it is delayed, the quality is poor and finally, they are not buying from our farmers so they are not creating markets here, they are creating markets for farmers in Asia and I asked them why when all you need to produce high energy food is sorghum, maize and soybean? We have that and we can grow more in the northern guinea savannah of Nigeria. So I got them to agree that they will buy high energy foods from Nigeria if we can get the private sector to set up a plant. We succeeded; we got Dansa Foods to put in 36 million euros to do that. So that will allow the farmers growing sorghum in the North-East and North-West to have big market for their sorghum. We have released for these farmers new high breed sorghum varieties which give them about five times the yield they are currently getting. Finding the market was going to be a problem and that was why we decided to get a private investor to do that. Groundnut: Nigeria used to have groundnut pyramids and then they disappeared as a result of a disease called rosette disease which wiped out our groundnuts because we did not pay attention to it and aflatoxin which spoils the groundnut. I met with the Emir of Kano and I did say that we will work to revive groundnut farming in the north and we have started. We signed an agreement with the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) based in India, world’s number one centre for groundnuts, to help us introduce new rosette-resistant varieties and aflatoxin-tolerant varieties and also technologies to do that. So we are well on our way, we are targeting about 280,000 farmers in the north.

exploit our water resources for agriculture. We are working together now in the Bakolori Irrigation project for wheat production in the north. But at the end of the day, we need to learn from the experiences of India and Pakistan where they use small scale pumps, wash bowls and tube wells to get underground water to irrigate the fields. That was what we did for the dry season rice last year and it worked. How much fish does Nigeria produce currently? The total consumption of fish in Nigeria is about 2.34 million metric tons; we produce about 780,000 metric tons so we import the difference of about a little bit over one million metric tons. But my position is that it does not make sense for Nigeria which is blessed with Atlantic Ocean, rivers, lakes, creeks and ponds, so what are we importing fish for? Fish grows inside of water and we have that water so we decided that over the next four years, we *Dr. Adesina...to reach farmers directly with are going to be very seeds and fertilisers, we developed the e-wallet aggressive in pushing an system import-substitution policy for coming out of Kadawa valley which Nigeria to be self-sufficient in fish today rots away. Secondly, they put in production. Of course there would be about $40 million in Cross River State some fish that are not farmed fish that to put up a 6,000-hectare plantation for people will want to import, that is ok. pineapples, and then they will process You can import because you have a two kinds of pineapples - one for local taste for something but to depend on imported fish? I cannot accept it. We consumption and one for export. They will produce juice so that we can are addressing the problem of begin to drink our own pineapple juice aquaculture which is the fastest way instead of buying concentrate from of growing fish especially tilapia and outside. In Benue State, Teragro, a catfish. subsidiary of Transcorp has invested e have an aquaculture $6.5 million to set up a plant. They are value chain that is buying oranges from all over Benue and processing there. Also, East African encouraging massive production of Trading Group (ETG), has come into fish and our goal is to have two million Nigeria. They are going to invest up to metric tons of table fish which will $100 million in agriculture but they are replace what we are currently starting with about $10 million to build importing. We are also working to a plant that will process juice. Today, if improve our deep sea fishing. Today, you look at your orange juice, it is foreigners come into our shores with concentrate mixed with water. The only big trawlers and cart away all the fish local content is water but we are and shrimps, and then process them and send them back to us. Yet, a lot of changing that. our fishermen that have trawlers are What is your ministry doing about out of business because of attacks by pirates on the sea so we are beginning abandoned irrigation facilities? In agriculture, water is important but to address that issue. The third one is what is most important is the small scale fishermen. As a management of water. How much grain government, this country has never are you getting per drop of water? supported fish farming. In the SouthIsrael does not have dams but it is one South, all they do is fishing so we of the largest food producers in the started this year to give what we call world because they manage water via Growth Enhancement Support which is subsidy for those that are into fish drip irrigation. Nigeria farming. We give them fingerlings, fish does not have problem feed and nets. We allow some of them with water, it only has that are in cooperatives to get outboard problem with engines for their boats. We are managing water. This registering the boats so we know who government is doing they are and what they need. It is the quite a lot about dams. first time ever that government will The Ministry of Water support fishermen in Nigeria. That is Resources has a very because I am concerned that we have active plan to complete enough fish production to meet up a number of these with our protein requirements but I dams and also develop want that done here to create jobs. In downstream irrigation the South-South Cooperation with the infrastructure to allow Chinese, they introduced a technology us to use the dams for called Fish cage culture which allows a g r i c u l t u r a l you to put your cage right in the production, we have a middle of the pond. We are going to close working be promoting a lot of that. In one of relationship with the Ministry of Water Continues on page 30 Resources to further

What is important is not what is under you; what is important is how you unlock the potential of what is under you; it’s not the number, it’s the effectiveness, efficiency and productivity that matters

28 — Vanguard, MONDAY, OCTOBER 7, 2013

Vanguard, MONDAY, OCTOBER 7, 2013 — 29

Interview

—Akinwumi Adesina BY EBELE ORAKPO

We aim to unlock agricultural potential to drive economy

30 — Vanguard, MONDAY, OCTOBER 7, 2013

Interview

We aim to unlock agricultural potential to drive economy — Akinwumi Adesina Continued from page 29

them more to real problems to become more relevant and supportive.

the areas they went to, the locals said that the spirits in the water did not allow them to do anything but the Chinese set up their fish cage culture and transformed the village, so apparently, it is not the spirits, it is just laziness and lack of ideas.

What is your ministry doing to encourage the youth to go into agriculture? One of the things we started doing was to change the mindset on agriculture, agriculture is a moneymaking venture. Nobody drinks oil or smokes gas but everybody eats food and since we have 167 million people who live here and eat food, we should be producing and processing food for them. We started by telling them that it is a business and agriculture is not when you see a farmer with a hoe or cutlass, no, that is suffering. We are changing that. Sometimes when we get used to a bad thing, you think it is normal. hat is why we are going into mechanised agriculture. We are establishing a total of 80 agricultural entrepreneurial training centres across the country and we are giving them a lot of tractors, combined harvesters etc. It is run by the private sector but we are supporting it because it will allow our farmers lease equipment. In fact, for the first time, we are giving what is called Mechanised Growth Enhancement which means the farmer gets alert on his phone to go and rent equipment so it is one of the innovations we brought in. Two, we are getting young people into agriculture. A young master’s degree holder left Abuja for his village to start cassava farming. In one year, he employed 65 people full-time, he has become a young commercial agricultural entrepreneur. People are leaving the banks to go into agriculture because they see it as business. Banks that were not lending to agriculture before are lending a lot more now because they see the opportunities. That is why the President launched the Youth Employment in Agriculture Programme to create a new generation of young commercial farmers and agriculture entrepreneurs (Nagropreneurs) who will replace the aging ones. The programme will develop a total of 760,000 Nagropreneurs within five years and this will create about seven million jobs across the agric value chain. The new millionaires of Nigeria will be in agriculture. How C M Y K

the

ministry

*Adesina... if you look at your orange juice, the only local content is water but we are changing that. partnering with research institutes or are the highyielding seeds imported? All the research institutes and parastatal agencies are under my ministry but you know, what is important is not what is under you; what is important is how you unlock the potential of what is under you; it’s not the number, it’s the effectiveness and efficiency and productivity that matters. When I was appointed minister, as a government, we put up a plan to invest more in agricultural research and you would expect that will be the case, the President has a PhD in Biology so he is a scientist. He said ‘look, we’ve got to do more in agricultural research.

t the start of the present administration, the share of the agric budget that went into research was about 8 per cent. In our first year, we increased it to 22 per cent, second year we increased it to 23 per cent and this year, it’s going to be about 23 per cent because budget is still tight but that is a big shift from 8 per cent. That is because we recognised the importance of research and I am thrilled wiith what our research institutes have done with the little they have. Cocoa Research Institutes of Nigeria released eight cocoa hybrids first in the world to release those kinds of hybrids that give you yields five times what farmers are getting. The cocoa varieties mature in two and half years instead

of five years and the butter content is better. At the National Root Crops Research Institute, Umudike, they developed a new variety of cassava called Pro-Vitamin A cassava in partnership with IITA and Harvest-Plus. This will allow people who consume a lot of starch to have vitamins in the products. The Lake Chad Research Institute, Maiduguri, has released new varieties of

On partnership with the Brazilian Agricultural Research Corporation, Embrapa: razil is today world's number one in poultry, beef and citrus production because it transformed the savannah area into a food basket and their savannah is worse than the northern guinea savannah of Nigeria. While they are making money, ours is full of poor people so we decided as a government that we must borrow from Brazil and turn around the northern guinea savannah of Nigeria. To do that, we have to invest in research, market and infrastructure. We brought Embrapa, Brazilian Agricultural Research Corporation which turned agriculture around for Brazil. I went to Brazil and talked with them, they came here and we have already set up a partnership arrangement to transform the northern guinea savannah of Nigeria. Agriculture in Nigeria has so much potential but we need to invest properly to unlock that. So we are going to work on what is pretty much an Economic Marshall Plan for northern Nigeria because that plan is based on agricultural transformation and industrialisation just like Brazil. We will be reforming our own agency called the Agricultural Research Council of Nigeria and all of our research agencies to be accountable to agriculture value chains. We will no longer pay people to just sit

Gone are the days when agriculture is some kind of backwater; agriculture is the front and centre of the economy, a money-making venture

wheat which will give yields five – six tons compared to less than one ton they were getting in the 80s, all in the last two years. Now we have the potential to actually produce wheat economically not politically. Our target is to reduce our wheat import by half within the next two – three years, taking advantage of the new varieties. So the future is bright for agriculture but we need to fund the research institutes more. I am a scientist so I know the value of research. We decided that they have to change their approach and become more demand-driven as opposed to supply-driven because people don’t eat publications, they eat food. So we are connecting

around; they have to produce, that allows us to grow the economy and that is the direction we are going. Nigeria spends so much bringing in processed food, what is the ministry doing to assist and encourage farmers to go into food processing because when you go into Shoprite and others, you see that most of the processed foods are imported and these things can be processed here? irst and foremost, we need to reduce postharvest losses because if you are going to process foods, you must be producing enough food and reducing losses. As a country, our postharvest losses are too high.

For some of our crops, it is as high as 40 – 45 per cent and that is because in this country, we don’t have warehouses. My ministry has invested in silos. We have big silo capacity in the country which is very good for us to be able to meet our storage requirements. We have today about 1.3 million metric tons of silo capacity and that allows us to store food to maintain our strategic grain reserves. However, to store grain, maize, soybeans, fruits and so on, you need warehouses and we don’t have warehouses. So as a ministry, we decided to invest in warehouses. We are currently working on a plan that will install world class warehouses in every local government area of this country; that will help farmers to reduce post-harvest losses. In the area of processing, we are currently designing what is called Staple Crop Processing Zones, just like your export processing zones except that this time, it is to set up clusters of food manufacturing plants around areas with high production. You don’t move raw materials down to Lagos, you move to where the raw material is and process it there. The cost of raw material will go down, production by farmers will go up, the market for farmers will be there, the jobs will be created and the rural economy will grow and so this staple crop processing zones that Mr. President has directed us to pursue is very innovative. The World Bank, African Development Bank, USAID and DFID have come together and said 'this is innovative, we haven’t seen it done in any country.' Normally, you would set up a plan somewhere in Lagos and then you will be roaming around looking for raw materials but here, we are changing that so this will allow us to create incentives for food manufacturing plants. Take the case of cassava in Agbadu, Kogi State where Cargill, world's largest manufacturer of food, is investing in Agbadu, 15,000 hectares. They are going to be processing cassava into starch, starch into sweeteners to replace sugar. This will create markets for all the farmers. In Kwara State, Flour Mills of Nigeria in partnership with UNILEVER and a local investor, are investing to process cassava to starch, starch to sorbitol used in making oral hygiene products so soon, the tooth paste you use will be coming out of cassava. That is how processing adds value and create market. That is what we do.

Vanguard, MONDAY, OCTOBER 7, 2013 — 31

Homes & Housing Finance BRIEFS

Stories by YINKA KOLAWOLE

Ogun, Chinese firm to develop 2,000 houses

he Association of Housing Corporations of Nigeria, AHCN, has called for the establishment of a Housing Trust fund (HTF) as one of the ways of addressing the problem of paucity of funds militating against adequate development of affordable housing in Nigeria. This formed part of the submissions by stakeholders gathered at the Association’s National Workshop/Annual General Meeting recently held in Owerri, Imo State. The theme of the two-day Workshop was, “Effective Housing Provision in Post Global Economic Meltdown”. In his opening remarks at the event, AHCN President, Dr. Ifenna Chukwujekwu, said appropriate blending of sustainable mortgage market, development of local building materials and effective implementation of Public Private Partnership in housing provision is paramount to solving housing crisis in the country. He questioned the current contributory pension funds investment profile restricting the investment of about N3 trillion worth of pension funds into equities, government bonds and bank deposits without provision for housing development. “Workers need to retire to their own houses after a successful working career services to the nation. Therefore, a pool of long term funds easily accessible through the vast pension funds and the long term requirement of mortgage financing would surely enhance long term investment in the mortgage sector,” he said. In a communique issued at

Development of social housing

Housing: AHCN seeks establishment of trust fund the end of the workshop, signed by AHCN President, Chukwujekwu; and its Secretary General, Mr. D.A Har-Yusuph, participants at the workshop said the Housing Trust Fund could be used to harness untapped funds lying fallow in pension and insurance funds, unclaimed dividends and other related instruments for the development of the real estate sector. The stakeholders noted that the existing arrangements in the country for funding of housing provision was grossly inadequate, adding that the creation of HTF would help complement the National Housing Fund (NHF) to fast track housing development.

They identified Public Private Partnership (PPP), as a veritable tool of qualitative, efficient and effective mass housing delivery in a global economic recession, enjoining the three tiers of government to be proactive and take advantage of the PPP to increase housing stock in Nigeria. AHCN tasked government at all levels to fully explore the PPP consent by providing the enabling and conducive environment for private sector driven housing provision. Participants at the workshop also called for sustainable strategies that would increase the stock of affordable housing for the people. They listed other major problems of housing to include

Mortgage scheme: Lagos alerts on activities of fraudsters

he Lagos State government has alerted members of the public on activities of fraudsters who are inviting unsuspecting Lagosians to subscribe to the Lagos State Home Ownership Mortgage Scheme (Lagos HOMS) with the aim to defraud them. A joint statement signed by the State Attorney General, Mr Ade Ipaye, and Commissioner for Housing, Mr Bosun Jeje, said that the fraudsters provide false information purporting to emanate from government and request payment to certain banks. They noted that the fraudsters “have also sent out agents to sell printed forms to innocent members of the public

who seek allocation of flats under the Lagos HOMS programme”, adding that the information, invitation and demands do not emanate from the state government. They said the state is already tracking down the criminal elements with a view to prosecuting them. The government, through the statement, urged members of the public to report any person or persons making such demands to the nearest police station or law enforcement agency, while assuring all citizens that full details of the Lagos HOMS programme will be presented and widely publicised at the appropriate time. On the modus operandi of

the fraudsters, the commissioners said the criminal elements direct interested individuals to visit a particular website, requesting them to begin their subscription. According to the commissioners, the fraudsters have put in place false information on the website which was ascribed to the Lagos State Government and also requesting payment to some banks. They said such information should be disregarded as they do not emanate from the government, promising that full details of the programme as well as modalities for accessing the units would be put into public domain at the appropriate time.

lack of political will, lack of commitment to invest in housing and lack of holistic approach to housing matter leading to lack of finance, high cost of building materials and high infrastructural development cost. They also associated the challenges of real estate development in Nigeria with cash-based (cash and carry) economy and outright sales syndrome. The communiqué called for re-engineering of the nation’s mortgage system for effective and liberal mortgage loans administration for home acquisition for the people. It also canvassed increased funding of the mortgage market through long term financing from local capital market and external group. “The workshop notes the inherent advantages of Real Estate Investment Trusts (REITs) in creating mass housing delivery for the people all over the world and implore government to fully develop REITs market for expansion of real estate development in Nigeria. It also notes the availability of offshore funding for housing delivery and its attendant challenges and calls on government to support their housing agencies to provide government guarantee to access offshore funding for housing development,” it added. The communiqué implored all housing agencies in the country to explore the usage of instruments such as bond, stocks, mutual funds, insurance policies, Gold certificates, corporate guarantee, which are accepted by some lenders, to secure offshore funding.

gun State government is set to collaborate with a Chinese construction company, Citic Construction, to develop over 2,000 housing units in the state. According to a statement, the project which is meant to expand the scope of the state’s affordable housing and urban renewal programme, is being supported by the International Finance Corporation and the Sovereign Wealth Fund Investment Authority. Country Manager, IFC, Mr. Solomon Adegbie-Quaynor, was quoted as saying that the partnership would help to develop mass housing, comprising “social housing, middle income housing and slightly higher than middle income housing,” adding that Ogun is the first point of call where the feasibility study would be done. He noted that the construction company in charge of the project had the ability to build large units of houses, which could be purchased through mortgages after assessing the demand and the ability of the buyer to pay.

Housing summit to address development constraints

takeholders in the building construction industry, including officials of housing corporations and developing companies, are set to discuss issues relating to housing development in the country. The discussion will form a major part of the 2nd National Housing Summit scheduled to hold in Abuja, with the theme, ‘Constraints to housing development in Nigeria’. A statement by the organisers, Faculty of Housing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), said Managing Director, UACN Property Development Company Plc, Mr. Hakeem Oguniran, is expected to speak on the sub-theme, ‘Legal constraint to housing development in Nigeria’. Other speakers include President, Mortgage Banking Association of Nigeria (MBAN), Mr. Femi Johnson, and a past president of Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Nweke Umezuruike, who will speak on ‘Access to affordable housing: A mirage?’ and ‘The land factor in housing development in Nigeria’, respectively.

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32 — Vanguard, MONDAY, OCTOBER 7, 2013

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Vanguard, MONDAY, OCTOBER 7, 2013 — 33

Micro- Finance

How best would you measure the Nigerian Microfinance Industry? In corporate Nigeria, officially, commercial microfinancing is under a decade and in comparison with what obtains in other climes where micro financing has been practiced for over three to four decades; it will only be fair to say microfinancing in Nigeria is doing well and will do much better in the coming years. The sector is gradually gaining momentum more Nigerians are beginning to gain increased confidence in the sector. The Microfinance Sector has done well with over four million accounts of which 57.3 percent are male and 42.3 percent are female. According to recent statistics, the sector has disbursed over N97 billion in risk assets. In comparison to where we are coming from, this is reasonably okay. But if we are comparing with what it should be, it is a far cry as well over 67.2 percent of Nigerian adults summing up to 56.9 million are still financially excluded as stated in EFInA latest Access to Financial Services survey report in Nigeria. Nigeria still lags behind South Africa, Kenya, Namibia and a couple of others in financial inclusion indicators. Generally, there is more to be done.

healthy Microfinance sector should trigger a very active Micro, Small and Medium Scale Enterprises sector, the lifeblood of most viable economies. On the whole, microfinance banks in Nigeria have actively engaged a substantial number of Nigeria’s population in the area of financial literacy and access to finance. Through facilitation of group formation and lending more social skills and interaction have been

format. What difference do you think the MSMEDF would bring to the sector? The funds will enable more Nigerians have access to funds at a more reasonable rate. One of the basic reasons why MfBs can not immediately service more Nigerians is due to paucity of funds. The market is huge, largely untapped but the funds available for the banks that are MSME focused is very meager. It is expected that once institutions begin to access the funds, there will be a substantial difference in the impact that will be recorded on the MSME and SME sectors of the Nigerian economy.

Oketikun, MD, Fortis MfB

MfBs need more financial empowerment — Oketikun imbued into the consciousness of Nigerians at the base of the economic pyramid, particularly the women. In this wise, the sector have not only provided the supply of financial access but are also doing some work in the area of empowering the customers to be well informed on what to demand for. If the current tempo is sustained and a wellstructured support on funding and monitoring is maintained by the apex regulatory bank, the sector will do better and will add significant value to our economy. In borrowing to the low income earners, how would you rate the sector? There is a strong correlation between financial access and poverty alleviation. If we are looking in terms of available statistics how many people that have been affected, then you can aptly say that there is much room for improvement in the activities of all stakeholders. Take for instance, a further breakdown of EFInA report revealed the following: out of 84.7 million Nigerian Adults only 15.9 million individuals in Nigeria borrowed money in the last 12 months, only 7.9 million of individuals who borrowed money used it for business purposes. In the last 12 months, Commercial Banks advanced loans to only 5.6

percent with microfinance banks advancing loans to only 4.7 percent of the 84.7 million Nigerian Adults. These figures show that we are collectively not doing enough with about 900 Microfinance Banks (MfBs)

he Managing Director, Fortis Micofinance Bank Plc, Mr. Kunle Oketikun has called for more financial empowerment for Nigerians. This is following a breakdown of EFInA’s report, showing that out of 84.7 million Nigerian adults and only 15.9 million individuals in Nigeria borrowed money in the last 12 months and only 7.9 million of individuals who borrowed money used it for business purposes. In this interview with PROVIDENCE OBUH, he said, “With about 900 Microfinance Banks (MfBs) 22 Commercial Banks, and other financial institutions, there is a need for all stakeholders to do more and empower more people.”

If the current tempo is sustained and a well-structured support on funding and monitoring is maintained by the apex regulatory bank, the sector will do better and will add significant value to our economy

22 Commercial Banks, and other financial institutions. There is a need for all stakeholders to do more. We have to empower more people, we have to give out more loans, we have to sensitize more Nigerians and we have to ensure they have access to finance in a more cost effective and sustainable

oing forward from Independence what should we expect from the sector The Sector would have to do more in providing more channels to create access to finance, also, embrace mobile money and other forms of electronic payment to reach more people. As it is at the moment, Kenya and South Africa are doing well in the area of mobile payment, but by the time the microfinance sector in Nigeria embraces the use of mobile channels in dispensing their financial services what they have in other climes will be smaller than what we will have in Nigeria because we have the population advantage. Players in the sector need to urgently up their game in the area of customer education to ensure they know precisely what financial service to demand for. Players also need to build capacity in other to know the right financial service to supply customers in a way it will impact them positively. The midpoint between customer education and capacity building for microfinance operators is providing the appropriate financial service that will usher the hitherto excluded into financial freedom which is the basis for sustained financial capability. It will enable operators to be able to demystify banking and to be able to bring banking services that were thought to be for the rich to the door step of the poor. We need to design product that are customer centric, we need to expand our reach through application of technology into our processes so that more Nigerians can be seamlessly serviced. The regulators have to ensure that the new MSME funds are disbursed through a secured framework that will also make it accessible by microfinance institutions in Nigeria.

BRIEF 'Church has responsibility to care for the poor' BY PROVIDENCE OBUH

ith over 70 per cent poor in Nigerians, MOG has called on churches to stand up to its responsibility to address poverty in nation’s economy. Speaking at the Christian Ministers’ Welfare Initiatives (CMWI), also known as Minister of God (MOG), President of the group, Apostle Daniel Adebiyi said that the welfare initiative was to enlighten minister of God against the full time Ministry as some claims. According to Adebiyi, Pastor must have a job. They believe that as a pastor you don’t need to work but this brings poverty to some of them. 24 hours full time pastor leads to poverty. There are concession and we need to address it, how can you because you are a pastor you are not working. We want to align ourselves with the government because bible says every food of the land is for all not for a certain segment. He added that the initiative is a vision of two years with large network all over the country. “The motive is to alleviate poverty, we have 12 point agenda, but we want to empower ourselves first, then we come to the political terrain. A member of the initiative, Mr. Ayo Akintayo in his message identified 70 percent Nigerians to be poor, saying, “We need to show integrity, and that is leadership, people are ready to follow you when they know you care in reaching out to the poor. “We are not to allow nuisance in position of leadership, but people who fear God and that is how we can alleviate poverty; we have enough resources to go round in this country. People at the top are earning high, changing furniture within short intervals, they should allow the resources go round. “The money we should have used in setting up industries in the country, are taken abroad, we need to stand up for our right,” he said.

34 — Vanguard, MONDAY, OCTOBER 7, 2013

Appointment and Promotions vicahiyoung@yahoo.com 08033348923

PenCom approves Da-Souza as Trustfund Pensions’ new CEO

ational Pension Commission, PenCom, has approved the appointment of Mrs. Helen Da-Souza as the substantive Managing Director/Chief Executive Officer, MDCEO of Trustfund Pensions Plc. The Board of Tr ustfund Pensions Plc led by Dr. Mrs. Ngozi Olejeme had earlier confirmed the appointment of Da-Souza, the erstwhile Acting MD/CEO as the substantive MD/CEO of Trustfund Pensions Plc during the company’s Annual General Meeting in July, 2013. Da-Souza Joined Trustfund Pensions Plc as Director, Finance and Administration in 2010. She brought on board a wealth of experience garnered over 27 years having worked in Akintola Williams Deloitte from 1985 to 2010. She joined Akintola Williams Deloitte as a Trainee Accountant in 1985, and rose to the position of Associate Director in 2009, a position she held before joining Trustfund Pensions Plc in 2010. She attended the University of Nigeria Nsukka, where she bagged a B.Sc in Accountancy in 1984. She is also an alumnus of the prestigious Wharton Business School, University of Pennsylvania, U.S.A. She is an Associate member of Institute of Chartered Accountants of Nigeria, ICAN, November 1988 and Chartered Institute of

Taxation, CITN, November 2000. Da-Souza has attended and delivered papers at several conferences at home and abroad on Taxation, and Accounting. Speaking on her confirmation, Da-Souza expressed appreciation to the Board for the confidence accorded her leadership, saying assuming the position of the MD of Trustfund had added the responsibility of taking the organization to even greater heights. “I feel very excited and elated that this has happened. I promise that with the support of the management team and the

board, this is just the beginning of exciting times’. A former Director of the company and Director General of the Nigeria Employers Consultative Association NECA, Mr. Olusegun Oshinowo, said the Board could not have taken a better decision than to confirm Da-Souza, saying “her confirmation has shown that Trustfund is on the upward swing since she came on board’. She is competent, experienced and the performance of the company in these two years is an evidence of the quality she has brought to the organization.”

SCB CEO emerges outstanding woman in business

•Helen Da-Souza

Centre; Professor Innocent Ujah, Director- General, Nigerian Institute of Medical Research, NIMR, his wife and President of APBN, Bala Bawa Kaoje during the presentation of the 2013 APBN Award for Professional Excellence to the Director General last week in Lagos.

NIMR DG bags APBN award for professional excellence

irector -General of the Nigerian Institute of Medical Research, NIMIR, Professor Innocent Ujah, has been honoured with the Association of Professional Bodies of Nigeria, APBN, Award for Professional Excellence, AAPE. The award was given to him for his contribution to professional excellence and focused leadership to the medical profession and the nation at large.. Presenting the award, President of APBN, Bala Bawa Kaoje, said the objectives of the award was to recognise professionals who distinguished themselves in various fields of specialisation and played key roles in the development of the nation. According to him, the award was also to celebrate

professionalism, encourage present and future leaders to imbibe the spirit of accountability, integrity, excellence and other ethos of professionalism expected in nation building. Responding, Ujah expressed

gratitude to the body for founding him worthy of the award. Others honoured alongside with him at the well-attended event include; Hajia Maryam Ladi Ibrahim, Immediate Past President of APBN, Mr. Nweke

Umezuruike, Director, MCN Properties & Investment Company Limited, and Josiah Okoronkwo, Registrar/Chief Executive, Chartered Institute of Administration.

ANAGING Director/ C h i e f Executive Officer, MD/CEO Standard Chartered Bank Nigeria, SCB, Mrs. Bola Adesola, has won the winner of the Outstanding Woman in Business category at the African Business Awards, 2013. The award category was for the female candidate that has shown initiative and excellence in the workplace and made a significance contribution towards her company in terms of progress and growth. Leading African businessmen Tony Elumelu and Edward Boateng were amongst those that received accolades at the African Business Awards 2013. The event organised by African Business magazine, was held at the Mandarin Oriental New York recently. The African Business Awards are organised by African Business magazine and BusinessinAfrica Events and produced by IC Events. The Awards preceded the African Leadership Forum, a gathering of African leaders to discuss issues of leadership within an African context. Bola Adesola was appointed MD/ CEO of SCB Nigeria Limited in March 2011. Prior to joining the bank, she was an Executive Director in First Bank of Nigeria Plc where she was responsible for the Corporate Banking business, and managing the entire business in the Lagos Directorate including retail, corporate and commercial banking.

Abdallah gets award for transparency D

irector General of National Commission of Museum and Monument, NCMM, Alhaji Usman Abdallah, has received an award of excellence from the Fiscal Transparency and Accountability Initiation, FTAI. Abdallah was honoured for perceived transparency in the commission and prioritizing staff’s welfare. Presenting the award in Abuja, President of FTAI, Charles Edo, described Abdallah as a man who believed in merit, “somebody

you do not need to have godfather before you get what you deserved.” He said NCMM under the DG’s administration was growing stronger, making the country’s museums to be the best in Africa. According to him, “In the course of our interaction with the commission, we discovered certain quality in the life of the DG, which we felt we should commending him in our own little way by presenting him the award of excellent because he has done very well and he

meant well for this commission.” Receiving the award, Abdallah who dedicated the award to the commission’s workforce, noted that all his achievements were made possible by God. He assured that the commission would provide necessary support for the establishment of the Air Force Museum, noting that the establishment of the Air Force Museum would afford people the opportunity to see the development in the Nigerian Air Force in the past several years.

•Bola Adesola

Vanguard, MONDAY, OCTOBER 7, 2013 — 35

Why state governments cannot pay Uduaghan, could not, in his wildest imagination, have assumed that Nigerians would constitute the architects of their own misfortune. He probably thought that the world might need less crude; other nations could discover crude oil in their backyards and the nations of the Middle East which were facing embargoes would be allowed to join the crude market once again. All these had actually occurred; but the most important reason crude oil exports had become unreliable as a revenue source can be captured in two words – “oil theft”. Never in the history of Nigeria, and perhaps any nation, not at war, had so much of a nation’s revenue downfall been traceable to criminal activities by its own people with the

“

Many states have been unable to pay salaries because for the past three months , what is being given to them is not enough. That is where the challenge of paying salaries is coming from…”, Governor Emmanuel Uduaghan of Delta State, PUNCH, September 25, 2013. Governor Uduaghan earned my respect during his first term when he boldly warned his people about preparing for a future Delta State without oil. It was almost sacrilegious. Who ever wanted to contemplate such a future with so much oil still in the ground to be lifted? Even the Governors Commissioners, who clapped with gusto, were skeptical about such a prospect. Nationally, the Governor might as well have been talking to cows – for all the attention he received. Nigerians have demonstrated that if there is anything they don’t want to think about, it is a future without oil – because it will require a vast amount of effort to build such a future. But, like it or not, two things are well known about the future. First, the future will always come and it will always be different from today. Part of the future, about which Uduaghan warned us in 2007, is already here – six years after he sounded the alarm. And it is beginning to look unpleasant and frightening to those who can peer into more of the future. For the first time, since 1999, when Nigeria’s crude oil price started on an escalator, and volumes also climbed steadily, bringing unprecedented wealth to the country, Nigeria can no longer count on rising aggregate oil revenue. On the contrary, we are now faced with the real prospect of a decline in crude oil income for 2014. “We have met the enemy and they are ours”, Oliver H. Perry, 1785-1819. (VANGUARD BOOK OF QUOTATIONS p 48). But, even “Prophet”

untouchable. Unlike governments elsewhere, which get going when the going gets tough, the Federal government of Nigeria had simply adjusted to its impotence in the face of relentless assault by oil thieves. Next to corruption is extravagant waste. Governor Uduaghan, understandably, ignored the culture of profligacy which had developed in Nigeria since 1999. “Fish rots from the head” and the culture of deliberate waste starts from the Presidency and works its way down to the Local Government level. The President of Nigeria has ten aircraft in his fleet of planes; the British Prime Minister has none; Presidents of nations, far richer than Nigeria have

They claim they need them for their jobs. But, most states in America are larger than Nigerian states and many have more than one airport, No state in Nigeria has more than one airport, except Lagos

government appearing to be totally helpless to check the trend. However, that is only part of the story. The other reasons, again self-inflicted include incredible and unrelenting corruption at all levels. From Customs to Immigration to FRSC, the government loses billions of naira to criminals, in and out of government. The wealthy seldom pay their share of the tax – if at all. But, the “mother of all corruption is associated with crude oil export and fuel imports” – both under the Ministry of Petroleum; whose Minister is apparently

no more than one. But, Jonathan has ten. When it comes to cars, it is almost impossible to count the number of cars which come under the Presidential fleet. UK Prime Minister has only four. The governors of states have, without exception, copied the profligacy of the President. Like prodigal sons, which most of them are, including the progressives, they spend public funds in ways that would scandalise American governors despite the fact that we copied the constitution of the United States. No American governor, of any state, owns

a plane for his personal use as governor. Governor Suntai of Taraba State, one of the poorest states in Nigeria, not only spent public funds to buy a plane, he went and crashed it, then proceeded to spend even more money to treat himself for being reckless. The excuse given by our governors for their ridiculous expenditure is most laughable. When it comes to cars, even the most self-restrained governor in Nigeria will make the Swedish Head of State appear a pauper. One governor has over seventy of the most expensive cars in his fleet – each with a driver attached. They claim they need them for their jobs. But, most states in America are larger than Nigerian states and many have more than one airport. No state in Nigeria has more than one airport, except Lagos. So where in their states are they heading for in their planes? The frequent visits of our governors out of state, usually to Abuja, are totally unconnected with the governance of their states. Instead, they are mostly concerned with their party politics. Apart from having no planes to fly, American governors will not dare travel at tax payers expense just to attend the meeting of their political parties. Added to that inexcusable use of public funds is the amount of funds they spend when attending purely private functions. Let me draw attention to a very recent example. The regrettable death of Dr Olusegun Agagu, the former governor of Ondo State had resulted in Federal Ministries and State Governments spending huge sums of public money to mourn him. Then each state governor had again, either gone to Ibadan personally, with a large delegation, or had sent many people to the event. This is not an exception; it is the rule. Yet, compared to best

governance practices everywhere else, this is totally uncalled for. In my ten years in the US, not once was one cent of public money on such ventures. The number of Commissioners and Special Advisers each of them appoints could not possibly be considered by an American governor and retain his job for long. One governor, a progressive for that matter, appointed over 1000 Special Assistants and was hailed by the “progressive” media for that fiscal lunacy; that is in addition to over fifteen Commissioners. Yet, for all the waste, there is very little achievement to justify the expenditure. The prize for stupidity in governance, however, should be claimed by the governor who promised and started to pay anybody over 70 years in his state N10,000 per month – for nothing. Granted, many advanced countries operate a welfare system, but it is based on the fact that millions of their people are employed and they can support the old and unemployed. The governor who wants to pay idle old people governs one of the poorest states in Nigeria and unemployment there is very high. Yet, on that shaky foundation he proposes to build a viable welfare system which is sustainable. We wait to see how that will work now that revenue is certain to decline and expenses remain high because many of the same states governed by people spending money like drunken sailors are also highly indebted. Creditors will deduct their money at source. From now on, the states will be hot for governors – especially those up for reelection in 2014. Unless things suddenly change for the better, even the 2015 elections have already been decided. V i s i t : www.delesobowale.com

expected to speak on the role of entrepreneurs in National development. The one-day event will take place at the Lagos Chamber of Commerce and Industry

(LCCI) Exhibition and Conference Centre, Alausa, Lagos as another milestone and initiative of NNEW toward the advancement of sustainable entrepreneurship in Nigeria.

Business & Economy NECA set to hold women entrepreneurship fair By ONOZURE DANIA

ECA’s Network of Entrepreneurial Women (NNEW), is schedule to hold its maiden NNEW preneurship fair, come October 9, 2013, titled “NNEWpreneurship Fair ”. The theme of the Fair, “Financing your Business”, NECA said that financing business ha s become very significant for the Nigerian entrepreneur, who are facing challenges of conducive

access to finance their businesses. The keynote speaker at the

occasion is Dr Mrs Oby Ezekwesili, former Minister for solid Minerals, who is

50 Nigerian brands nominated for Mumbai award

s the World Brand Congress, WBC, 2013 tagged “Sustainable Brands” comes up between October 21st-23rd 2013 at Taj Lands End Mumbai, India, about 50 brands from Nigeria across banking, oil and gas among other sectors have been nominated for an award for

the event, reveals, the local representative of WBC, Mrs. Kofo Olaosebikan revealed. The WBC is strategically partnered by Chief Marketing Officers, CMO, Council USA and Asia which together have combined membership strength of over 6,500 members who control more

than $350 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. Olaosebikan said that Nigeria will be represented at the World Brand Congress 2013 in India where several

Nigerian brands have been nominated for prestigious awards in various categories. “We are delighted to announce that Nigeria will be represented at the World Brand Congress 2013 in India. Several Nigerian brands have been nominated for prestigious awards in various categories,” she said.

36 — Vanguard, MONDAY, OCTOBER 7, 2013

Vanguard, MONDAY, OCTOBER 7, 2013 — 37

E- Commerce

I would say that the product must work! There is nothing more annoying, frustrating and in fact, harmful to your brand/ product than a botched attempt at proving its efficacy and usefulness

•Bankole Cardoso Marek There are payments options available to e-commerce clients- Pay on delivery, and online payment with credit cards. However from my experience, Nigerians prefer the payment on delivery system, an offshoot of the fear of potential internet fraud. With Jovago.com, our travel portal which allows clients to book hotels all over the world online, most of the customers prefer to pay for the booking

ankole Cardoso is the Managing Director of one of Nigeria’s fastest growing e-commerce firm; EasyTaxi while his colleague, Marek Zmyslowski is the Managing Director, Jovago.com, an online company specialized in hotel booking. In this interaction with Jonah Nwokpoku, they argue that with increasing challenges of e-payments for online companies in Nigeria, strategic approach is required to stem the tide. Excerpts What do you think is driving the growth of ecommerce in Nigeria? Bankole I think that the rapid expansion of GSM, data services and Smartphone penetration has provided Nigerians with access to a lot more information and commerce. I think that this lifestyle change has resulted in a sophistication of tastes of the average Nigerian consumer who is now exposed to a wider variety of world-class products and services. Two years ago, phone applications like the Easy Taxi app which enables people book for taxis conveniently from their smartphones, could not have successfully operated. Marek One of the major growth drivers of e-commerce in Nigeria is the middle class. As internet access is rapidly becoming common place, the middle class is getting more tech-savvy and so is it’s purchasing power. Another strong growth driver of ecommerce is the demand for high quality goods, innovative products, services and platforms such as online hotel booking platforms like Jovago.com and mobile applications. Bankole I would also say that the democratization of the Internet has also provided an avenue for Nigerian entrepreneurs to leverage the global village online. They have played an important role in harnessing local talent to provide unique solutions for consumers such as payment on delivery. Consequently, this has resulted in a quick and embedded uptake of eservices and e-commerce is no exception to this rule. Giving your experience so far in the industry, what would you say about the payment system and what has been your greatest challenge?

Tackling e-payment challenges demands holistic approach —Bankole

•Marek Zmyslowski space in the industry. Mobile payment solutions, which are largely powered by our commercial banks and some independent players, are springing up left, right and center. More Nigerians have debit cards, which they can use to shop online and there are some other electronic payment alternatives. With awareness and education (aided by the CBN’s Cashless policy) there has been significant uptake.

I think that the rapid expansion of GSM, data services and Smartphone penetration has provided Nigerians with access to a lot more information and commerce

upon arrival. However that creates additional risk of a customer not showing up, which might pose as a challenge. This is why building brand loyalty is crucial to building sustainable business. Bankole Trust is a key component in any system that entails monetary transactions. This is even more important in the Nigerian ecosystem where the average Nigerian is largely apprehensive of his neighbour (in matters concerning money and other finances). However, Nigerians are quick to learn and are always on the quest to improve – so this is promising for the e-payments

Notwithstanding, Nigerians are still most comfortable with the cash-on-delivery option. Talking about my experience with my company, Easy Taxi is a new innovation that provides a safe, convenient and free medium between taxi drivers, operators and their clientele. By nature of the product, payment transactions between clients and taxi operators are not handled on the platform. So, payment has not provided a significant challenge for us yet. Regardless, as pioneers in the industry, Easy Taxi is consistently innovating and finding better ways to serve our customers and safer, more convenient payment options

are always being explored An online retailer, Kalahari recently pulled out of Nigeria citing payment challenges as reason; do you foresee other e-commerce operators closing shops in the absence of effective solutions to epayment challenges in the country? Bankole I highly doubt that this would be the case. The Nigerian market that Kalahari operated in is significantly different from today’s ecommerce market. . Right now with the ubiquity of the mobile phones and significantly cheaper and more affordable Internet access across socio-economic lines in Nigeria, e-commerce is positioned for a more favorable uptake. There is immense potential in Nigeria and I cannot imagine that any investor would want to miss out on it. What do you think can be the best approach to the epayment challenges in Nigeria? Marek Builidng trust for the brand and its services is the first necessary step. Educating customers about the comfort of e-payment alongside building rational awareness of the threats posed and how to overcome them is the second. This however cannot be done without a strong and reliable payment operator. Bankole I think we need a holistic approach to tackle the epayment challenges in Nigeria so I cannot pick out a single best approach. There’s a need to create

awareness of the ease and convenience of e-payment options and eradicate ignorance. Consumers need incentives to try out epayment options. Majority of the time, a consumer’s first experience with a successful end-to-end e-payment transaction is the most critical. The same can be said of introducing ATM cards into the banking system or even GSM phone adoption. These were new technologies that people were once not familiar with but a consumer’s first positive experience is all it takes to convert them. Lastly, I would say that the product must work! There is nothing more annoying, frustrating and in fact, harmful to your brand/product than a botched attempt at proving its efficacy and usefulness.

Do you think pure-click ecommerce companies pose a real competitive threat to traditional retailers i.e, brick and mortar companies? Marek E-commerce definitely redefines offline commerce and takes away a large portion of its customer base, however it could never replace offline commerce because they serve different purposes. For instance, sometimes you just fancy going to a shopping mall by yourself and touching the actual products, talking to the sales representative in person, e.t.c. Just like TV didn’t kill the radio, ecommerce couldn’t kill offline commerce. Bankole I am certain that they pose a competitive threat to traditional retailers. The cost-saving and synergies enjoyed in the online space cannot be beat! People shop online because of the convenience, choice and timesaving it affords them. However, I foresee a future where brick-and-mortar and online stores work hand in hand to ensure the best and most complete shopping experience for the customer. C M Y K

38 — Vanguard, MONDAY, OCTOBER 7, 2013

Tax Matters

Administration of withholding tax (11) BY FRANK OBARO

he organizations making the payments are required to withhold tax from such payments and pay over the withheld amounts to their respective relevant Tax Authorities within 30days of receipt of payment or credit by the person or entity suffering the Tax. The relevant tax authorities to receive the WHT tax transactions made by companies is FIRS and for individuals and unincorporated bodies subject to Rules of Residence is SIRS or FIRS. PERSON LIABLE TO DEDUCT WITHHOLDING TAX The payer of withholding tax in respect of any of the activities covered under the withholding tax regime shall include company (Corporate or non-corporate), Government Ministries and Department, Parastatals, Statutory bodies, Institutions and other established organization approved for the operations of Pay As you Earn System. WHO IS TAXABLE ? All Persons, Companies etc. who’s Incomes are liable to income tax, are subject to Withholding Tax. ? However, exempt entities like Educational Institutions, Government Ministries, Parastatals and other Agencies of Government, are Agents for the collection of WHT. They are required to deduct WHT on any payment made to a taxable body and remit same to the relevant tax authority. WITHHOLDING TAX IMPLICATION ON FOREIGN TRANSACTIONS Non Resident Companies/ Enterprises The Revenue practice is that nonresident companies are not empowered to deduct anytype of WHT. These categories of enterprises are practically outside the regulatory monitoring and control of the FIRS. It will be impracticable for Revenue office to inspect the accounting books of these companies in order to confirm due deduction and remittance of WHT. Double Taxation Agreement (DTA) Transactions that are ordinarily not liable to tax in Nigeria are not liable to WHT in Nigeria. Thus contracts and supplies of goods and services performed entirely outside Nigeria by non-resident individuals are not liable to WHT. Nigeria has treaty agreements with about eight (8) countries and these countries are granted a reduced rate of WHT deduction, usually at 75% of the generally applicable WHT rate. 7.5%. These countries include UK, Northern Ireland, Canada, France, Belgium, the Netherlands, Pakistan, and Romania. PERMANENT ESTABLISHMENT (PE) PRINCIPLE EXISTS UNDER NIGERIA TAXATION The rules construe a PE where: ? The company has a “fixed base” in Nigeria. C M Y K

? The company operates in Nigeria through a dependent agent authorized to conclude contracts or deliver goods on its behalf, ? The company is executing a turnkey project in Nigeria, or ? The operation between the company and its Nigeria affiliate does not appear to be at arm’s length. ? “Fixed base” implies some degree of permanence and will include: ? Facilities, such as a factory, office, branch, mine, oil or gas well ? Activities, such as building, construction, assembly or installation ? Provision of services in connection with the activities listed above. PRINCIPLES OF PERMANENT ESTABLISHMENT ? The rules construe a Permanent Establishment where: ? The company has a “fixed base” in Nigeria. ? The company operate in Nigeria through a dependent agent authorized to conclude contracts or deliver goods on its behalf, ? The company is executing a turnkey project in Nigeria, or ? The operation between the company and its Nigeria affiliate does not appear to be at arm’s length. “Fixed base” implies some degree of permanence and will include: Facilities, such as a factory, office, branch, mine, oil or gas well Activities, such as building, construction, assembly or installation Provision of services in connection with the activities listed above. OTHER TYPES OF INCOME NOT LIABLE TO WHT ? Companies operating within the Free Trade Zones/Export Processing Zones ? Insurance premium ? Turnover/Income from Dealership or Distributive trade ? Telephone Bills are not subject to WHT APPLICATION OF WITHHOLDING TAX Sections of CITA and PITA that provides for the deduction of withholding tax at the applicable rates below. Types of payment Applicable rates Companies Individual Dividends, Interest, Rent 10% 10% Directors Fees 10% 10% Royalties 15% 15% Commission, Consultation, 10% 5% Technical, Service Fees Management fees 10% 5% Construction/Building Contracts 5% 5% Contracts, other than outright sales and purchase of goods in the

currency in which the deduction was made. This means that transactions made in foreign currency are to be remitted in the same currency and that the tax so withheld is to be remitted in the same currency. Simultaneously penalty for default would also be calculated in the same currency. ? HOW TO C L A I M WITHHOLDING TAX CREDIT (CREDIT NOTES) A taxpayer from whom tax has been withheld is expected to gain withholding tax credit notes from the relevant tax authority via the ordinary course of business 5% 5% Returns & Remittance Tax Returns are filed monthly with evidence of remittance and a detailed schedule of taxable transactions. Submitted schedule should show the following details: Name of supplier Address Nature of Invoice payment Amount Rate @ Y% Tax

Service Date Date ? Returns for corporate suppliers should be filed within 21 days from end of month of transactions. ? Returns for non –corporate suppliers should be filed within 30 days from end of month of transaction. ? In practice, tax returns are filed in the same month they occur. ? Tax deducted should be remitted to the revenue in exchange for a receipt of payment. ? Tax is payable in the currency of the qualifying transaction. Following payment and filing of returns, the revenue processes credit notes for the suppliers on whose income tax was deducted. ? Credit notes can be used in applying for tax credit against current and future tax liabilities (i.e. where it is not final tax) ? Remittances are due to either federal or state tax authorities. Remittances due to Federal Inland Revenue Service (FIRS): ? Corporate entities, ? Nonresident individuals, ? Members of the armed forces and police, ? Resident of Abuja, ? Foreign officers. Remittances due to state internal revenue service (SIRS): ? All other individuals / partnerships resident in the state. ? PAYMENT ON CURRENCY Section 64B of CITA empowers the tax authority that withheld tax must be remitted to the tax authority in the

deducting organization. All withheld taxes are forwarded to the tax authority, which in turn records the credit against the tax payer’s account, with a schedule containing details of the contract or service, on which basis the tax authority issues a credit note. Assessed tax and related charges are usually entered as debits in the taxpayer’s tax account, while he is expected to pay only the difference between his assessed tax and withholding tax credit at the time of filing their own returns. ? It is this credit note that a taxpayer uses as a set off against tax assessed within that year or if unutilized within that year can be applied based on the taxpayer request to transfer the credit balance in that year to offset or reduce debit balance of another year. ? In cases where there is an excess charge of WHT on a taxpayer, the 2007 amendments to CITA (Section 63 (7)) have even further empowered FIRS to refund proven excess withholding tax to any taxpayer within 90 days of filing a claim. OFFENCES AND PENALTIES OFFENCES ? Failure to withhold tax or ? Failure to remit or late remittance of the tax withheld ? Non remittance of the tax withheld within the time limit stipulated by the Revenue. PENALTIES a. For Companies A fine of 200 percent of the tax not withheld or withheld but not remitted, plus interest at the prevailing commercial rate. b. For Individuals & other Organizations A fine of the higher of N5,000 or 10% of the amount of tax due, plus the amount of tax deductible , or withheld but not remitted, plus interest at the prevailing commercial rate. • Interest on Savings Account of less than N50, 000 paid by a Bank, is not subject to WHT. The WHT system has come to stay

Vanguard, MONDAY, OCTOBER 7, 2013 — 39

Advertising, Media & Marketing

DABRA: Rewarding excellence in business reporting Stories by PRINCEWILL EKWUJURU

t’s instructive when businesses want to guarantee long-term success they must ensure the success of their operating environment. Diageo, represented by Guinness Nigeria, is a company that seems to take its role in adding value to the society seriously. The company has shown to be a responsible member of the society, but this should not be surprising considering the roots of Guinness itself. Arthur Guinness started brewing stout lager in 1759 at St. James’ Gate brewery. Guinness, who was a Protestant, went on to set up some of the most impactful community outreach and welfare programmes in the history of Ireland that continued for many years after his death. It was recorded that by 1900, Guinness’ brewery was operating unparalleled welfare schemes for its 5,000 employees and by 1907 the welfare schemes were costing the brewery £40,000 a year, which was one fifth of the total wage bill at the time. Diageo, the British company which took over Guinness seems to have bitten the bug and have an uncommon and unwavering pledge to serving society at large that speaks to the very values upon which Guinness built his legacy. It is against this background that the company initiated the writing awards focusing on Africa, which has gained ground across the world as the Diageo Africa Business Reporting Awards (DABRA). These Awards have put 10 years into rewarding excellent business reporting, focusing on Africa while drawing global attention to a region hitherto neglected for not so clear

reasons, not excluding prejudice cultivated in the minds of prospective investors by negative reporting of social, cultural and economic activities therein. It is difficult to place numbers on the volume of investment that has been drawn to Africa from the Diaspora as a result of these Awards, but what is certain is that the DABRA beams positive light on the African continent with the Awards ceremony holding annually in London. The Awards ceremony is always a celebration of Africa and the unique values that international investors can

Mr. Seni Adetu (4th from left), Managing Director/CEO Guinness Nigeria Plc, with the 2013 Diageo Africa Business Reporting Awards (DABRA) finalists from Nigeria at the recently concluded award ceremony held in London recently.

Consumer right protection imperative for healthy society, says expert

he best ways to better the lives of Nigerians is to protect their rights against incessant abuses by manufacturers of goods and service providers, a consumer right activist, Mr. Moses Igbrude has said.

Lafarge, others take home SERA's statuettes

he prized statuette for the winner of the Most Socially Responsible Company in Nigeria 2013 was taken home by Lafarge Cement in addition to the statuette for Design for Sustainability which represented the SERAs 2013 thematic focus. The theme of the SERAs2013 focused attention on design and innovation for sustainability - “Shaping the Future Through Innovative Value Creation: Making a World of Difference”

derive by setting their sights on the continent. It has continued to attract the elite, influencers and investors. For instance the first DABRA Awards were presented on 16 July 2004 at the Commonwealth Secretariat in London. This maiden edition attracted a colourful and diverse audience of over 100 guests, including MPs, business leaders, ambassadors and journalists. This unique global audience was treated to a flavour of African music on the occasion as entertainment was provided by Seckou Keita, a kora player from Mali. The Awards buttress the impact the private sector can have in driving investment to Africa and helping her meet the Millennium Development Goals.

The 7th Annual the SERAs was celebrated in Lagos, recently saw the executive governors of the State of Osun, Ogbeni Rauf Aregbesola; and Katsina State, Dr. Ibrahim Shema received recognition awards at the SERAs 2013 for strides achieved in their respective states in the areas of educational and infrastructural development. The awards to the governors was presented by Honourable John Owan-Enoh, who chaired the occasion.

Moses, who is the chairman of Consumer Rights Awareness Advancement and Advocacy Initiative, CRAAAI, who spoke to journalists in Lagos on lack of proper attention to issues concerning the way consumers are treated by players in various sectors of the economy. He described Nigeria as one of the few countries of the world where stakeholders pay lip service to cases of fake and adulterated products and poor service delivery. However, the activist commended the Consumer Protection Council (CPC) and other relevant regulatory agencies like the Standards Organisation of Nigeria (SON), and the National Agency for Food and Drug Administration and Control (NAFDAC), which he said, are trying their best to protect consumer rights. “It is sad that after decades of independent, consumers in this part of the world are still in bondage. From Aviation sector to banking and food and beverages, cases of abuse of consumer right are daily making the headlines of the newspapers and the perpetrators are getting away with it.

Let’s Think Service

he Customer Service Week (CSW) is here! You probably know that the first full week in October is celebrated as the Customer Service Week in a number of countries. It’s a time to beam the spotlight on customer service issues and appreciate those who serve customers. Ever since the International Customer Service Association (ICSA) came up with the idea of a customer service week, the celebration has gained acceptance across the globe. In 1992, the US Congress formally recognized it as a national celebration. I am not aware the customer service week has gained any form of official recognition in our country. But that doesn’t matter much. What matters is that there is a dire need to focus on customers and the quality of service we render to them. Just as in most things, we have much to complain about, as far as service in our country is concerned. Without talking politics, we realize that we all are customers to people in government and we can safely say that the kind of service Nigerians receive is simply appalling – hence our roads remain unmotorable, most of our public hospitals are worse than mere consulting clinics, power supply remains epileptic and no year goes by without any strikes. For the same reason, the National Assembly fails to pass enough bills that address the needs of the people and our president doesn’t seem to be in a hurry to deliver service although his customers are tired of waiting! We could go on and on. In a few months, another round of elections will come up and politicians will expectedly make tongue-in-cheek promises, knowing that they don’t plan to keep many. Sometimes, I think that politicians also need customer service training! Perhaps they don’t really see us as customers although whenever they seek votes they make mealy-mouthed references to “service” as their motivation. At the risk of sounding simplistic, I dare say that most of the problems we face as a nation can be traced to a culture of poor service. Whether in business or in government, many of us see service as something beneath us. Rather than serve, we seek to be served! For this reason, a local government chairman expects other citizens to kowtow to him. Some men of the uniformed services think their starched clothes make them superior to those whose money pays their salaries. And a governor demonstrates his divine immunity from traffic jams by blaring sirens and terrorizing innocent citizens whose tax and votes gave him the paraphernalia of his exalted office! In the private sector, the story is just a little better. But, generally speaking, customers are not treated with the respect they deserve. Frontline people have little or no power to resolve simple issues. Managers keep creating rules that make serving customers virtually impossible. Organisations advertise things they don’t do. Top officials think they have outgrown service. Of course, there is some silver lining in the cloud (of poor service) but it looks so thin that you sometimes need to strain your eyes to notice it. As we celebrate the customer service week, let’s focus our thoughts and energy on serving customers better. Whoever you are, whatever you do, whether you are in the public or private sector, spare a thought for your customers. How can you serve them better? How can you make life easier for them? How can you support those who serve if you are not on the frontline? What can you do to motivate your colleagues? Share your story Have you received exceptional customer service anywhere in Nigeria? Can you share your story in about 100 words? As we celebrate the CSW, I invite you to share the story of great customer service you have received in Nigeria. The best 10 stories (in my estimation) will be published in this column to motivate our readers and show that great service is possible here. For their effort, the writers of the selected stories will each receive an autographed copy of either How to Serve & Keep Your Customers or 20 Universal Laws of Service Excellence. Start writing now. Email your story to: allwellnwankwo@gmail.com. Story submission ends on Friday. Happy Customer Service Week! C M Y K

40 — Vanguard, MONDAY, OCTOBER 7, 2013

Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

ny patron of Bureau de Change may find that a difference of about N10 per dollar now exists between the official rates of N155 per dollar ex-Central Bank, and about N165/dollar in the open market. This is in place of the permitted 1 per cent markup officially allowed to commercial banks on dollar purchases exCBN. According to the CBN, commercial banks have taken advantage of the wider gap in forex rates to roundtrip dollars earlier purchased from CBN’s forex auctions with large-scale dollar importation, for onward sale to Bureaux De Change (BDCs) and customers. Surprisingly, despite serious implications of such odious practice on the economy, no bank has so far suffered any serious sanction. In an attempt to puncture the bloated demand for dollars, CBN, last week, rolled out a series of measures, which included withdrawal of the operating licences of about 20 BDCs for purchasing and selling huge sums of dollars, without appropriate documentation, against CBN guidelines; furthermore, commercial banks will henceforth only be allowed to import foreign cash after prior CBN consideration and approval. Paradoxically, in order to curb dollar demand, CBN also raised the existing limit of US$40,000 to US$150,000 per annum for holders of naira debit and credit cards. Question is, how many Nigerians earn this kind of money, and how much tax do they pay? Nonetheless, CBN’s latest requirement that recipients of foreign exchange money transfers (i.e. exWestern Union, etc) shall henceforth be paid in naira, may

Guess who is dollarising the economy actually, drive the bulk of such remittances back into the ‘black market’, which offers better exchange rates. Similarly, CBN’s reduction of BDCs’ maximum weekly purchase from $1,000,000 to “mere” $250,000, in spite of rising demand, might actually further reduce dollar supply and instigate naira exchange rate well above N165=$1. Curiously, however, in August 2011, CBN management had approved the removal of the limit of $1m/week sales to BDCs as part of the measures to “sustain and ensure exchange rate stability”. Ironically, conversely, the slap-on-thewrist penalty for those apprehended for smuggling million of foreign currencies from Nigeria remains the simple forfeiture of 10 per cent of the foreign exchange value to government. In addition to the latest measures, CBN has also abolished the Wholesale Dutch Auction System (WDAS), under which banks could speculate, buy and hoard foreign exchange purchased from CBN, for onward sales to customers and importers; consequently, the Retail Dutch Auction System (RDAS) has been reintroduced, so that banks would now only purchase foreign exchange as per the specific demand of their customers. Incidentally, the failure of this same reinstated RDAS, in the past, led to its substitution with WDAS, which is now again being replaced by the earlier discarded RDAS. See our article titled “WDAS:

Why is CBN Fooling Nigerians?” published in 2006, at http://www.lesleba.com/ wdas.doc.

t is noteworthy that several forex market systems, such as FEM, IFEM or AFEM, DAS, were also adopted in the past, but regrettably, just like RDAS and WDAS, they all failed to forestall extensive dollar hoarding and roundtripping! Consequently, this latest reintroduction of RDAS

Every month, against the grain of wisdom, CBN religiously, borrows about N300bn excess cash from the money market at oppressive interest rates in order to reduce perceived excess naira from our money market. S a d l y, despite CBN Governor ’s belated “confession” of “inadvertently” sustaining the practice of borrowing back government funds in such transactions, Nigerians are not bothered by

A stronger naira will shift market preference from the dollar and reduce the propensity for round tripping

is retrogressive and akin to a dog returning to its vomit. In reality, the forex market structures failed because CBN consciously ignored the other side of the equation relating to the supply of naira, because, as earlier indicated, when increasing cash sums chase any commodity whose supply is sticky, the price of that commodity will invariably rise. In other words, whenever naira supply increases relative to available dollars, we can expect that the price of dollars will rise with increased patronage. So, any realistic and sustainable solution to the consequences of a beleaguered naira must recognize the origin of unceasing excess naira or excess liquidity in the market.

revenue in monthly allocations to the three tiers of government. Surely, the CBN cannot sincerely contest this reality. Conversely, if dollar revenue allocations are paid with dollar certificates, we will immediately find that the destabilising problem of useless and excess naira in the system and accumulation of avoidable public debts will become a thing of the past, as the curse of systemic naira flush with minimal improvement to societal welfare will disappear from our monetary predicament. The artificial lopsided equation between naira and dollar supply will begin to be redressed in favour of the local currency. A stronger naira will shift market preference from the dollar and reduce the propensity for round tripping. Furthermore, it is paradoxical that naira rate of exchange comes under pressure simultaneously with increasing CBN dollar reserves; in other words, while the CBN decries the excessive demand for dollars, and the higher propensity for Nigerians to hoard dollars, the real villain in the price mechanism that weakens the naira is actually the CBN, as it jealously hoards and presides over $40bn, after suffocating the money market with unbridled naira creations substituted as monthly allocations for distributable dollar revenue. So, in effect, it is CBN’s obnoxious monetary policy framework that repels market affinity/loyalty to the naira, and therefore, promotes dollarisation of the economy with large-scale forex round tripping. SAVE THE NAIRA, SAVE NIGERIANS.

the reality that such humongous public debts are ultimately not applied to infrastructural enhancement or improvement in social welfare of Nigerians. Although the CBN and its surrogate parastatals such as Asset Management Corporation of Nigeria and Debt Management Office would swear that the perceived excessive spending of the three tiers of government is responsible for the unending excess cash in the system, the truth, of course, remains clear, that the unending scourge of systemic excess naira is the result of the ability of commercial banks to leverage multiple folds on the fresh inflow of hundreds of billions of naira, which CBN substitutes for federation dollar

Business & Economy including infant nutrition aid, national parks and Internal Revenue Service audits. Other services, such as air-traffic control and Social Security benefits, were operating.

Crude oil price drops on concern US shutdown may curb fuel demand

est Texas Intermediate fell from its highest settlement in almost two weeks as the U.S. government’s partial shutdown fanned concern that economic growth may slow. Futures slid as much as 0.6 percent in New York. Talks between President Barack Obama and U.S. congressional leaders yesterday failed to break the budget logjam as the partial government closure entered its third day. WTI jumped 2 percent yesterday to the highest level since Sept. 20 after TransCanada Corp. (TRP) said it expects to complete work on the southern portion of its Keystone C M Y K

pipeline expansion by the end of October. “Oil has been under pressure with the gloomy economic picture, and in the past few trading sessions with the U.S. government shutdown, which may slow oil demand,” said Myrto Sokou, an analyst at Sucden Financial Ltd. in London. WTI for November delivery dropped as much as 65 cents to $103.45 a barrel in electronic trading on the New York Mercantile Exchange. It was at $103.69 as of 1:22 p.m. London time. The contract yesterday advanced to $104.10 in the first gain in four days. The volume of all futures traded was about 2 percent

below the 100-day average. Brent for November settlement fell as much as 49 cents, or 0.5 percent, to $108.70 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $5.82 to WTI, up from $5.09 yesterday, the least since Sept. 23. U.S. crude inventories climbed by 5.5 million barrels last week, data from the Energy Information Administration yesterday showed. They were forecast to rise by 2.5 million in a Bloomberg News survey. Government Closures The stalemate in Washington put about 800,000

federal employees out of work and shuttered many U.S. government functions,

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