Impending Flood: Insurance gets zero consideration

JUNE 18 , 2012

IMPENDING FLOOD:

Insurance gets zero consideration •Would-be victims perfect plans to abandon homes when disaster strikes •Property worth billions estimated to be destroyed

By ROSEMARY ONUOHA

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espite warnings of severe rainfall being anticipated this year from the Nigeria Meteorological Agency, NIMET, residents of flood prone areas have refused to embrace insurance as a form of risk prevention mechanism in readiness for the expected flooding, Vanguard investigation has revealed.

Even when some state governments like Lagos, Ogun and Rivers have employed series of measures to help curtail the impact of the anticipated flood, insurance operators are worried that there is no concrete plan to involve the insurance sector in the scheme of things by these state governments.

This is in sharp contrast to what is obtainable in other countries where flooding has caused severe devastation. In Australia for

instance, the government has drafted a proposal to make flood cover mandatory in all homes and contents policies aside from the huge capital that it has committed into environmental safety.

In Nigeria, the scenario is worrisome. In Port-Harcourt, Mr. Austin Okereke, an electronics dealer in Mgboba in Choba town said that after the flood that ravaged the city, almost all the goods in his shop were destroyed and most people dwelling and doing business around that vicinity packed out. On whether he has any insurance plan, Okereke said that he is not looking at insurance for now. He said that he is trying to prevent more damage by clearing the drainage and raising the platform in front of his shop.

Also, Ayo Daniel, a wine dealer in Port-Harcourt said that most of his goods were damaged after the flood.

Although Rivers State Government started work on the dredging of

channels and canals, Daniel said that the government stopped halfway without completing the work. He said that with the unfinished work, the floods will definitely be back. Daniel however, said that he does not believe in insurance because he fears that insurance may not readily pay his claims when the need arises. The preventive method against the impending flood for him is to add more blocks to the pavement in front of his shop. Another option, according to him, is for the state government to create proper drainage system.

In Ibadan, after last year's floods, a relief camp was opened for the victims, located at Oke Ayo. At present, the camp is deserted after distribution of relief materials was stopped. Governor Abiola Ajimobiled administration said it is concentrating on opening drainages and dredging of rivers and streams

across Ibadan metropolis and other parts of the states.

Mr. Ekene Akorisa, who resides in Ajeromi /Ifelodun Local Government Area of Lagos State, is a victim of last year's flooding in Lagos that destroyed lives and property worth billions of naira. Akorisa, who claimed that all his property was destroyed, including his motorcycle, is still trying to find his feet one year after the flood disaster. Although the Lagos State government is making efforts to curtail such massive disaster this year, Akorisa said since he got no compensation for the loss of last year, gathering his life back has not been an easy task. Asked if he has any plans for insurance, Akorisa said that he has no plans but wants the government to protect the lives and property of its citizens.

For Daniel Oyebanjo who lives at Wilmer in Olodi- Apapa area of Continues on page 18

152.05

+1.00

2,244.00

-19.00

20.60

+0.63

97.30

+0.13

83.65

-0.26

CURRENCY BUYING CENTRAL SELLING

The President and Chairman of Council of the Nigerian Institute of Management on Thursday paid a Visit to the Group Headquarters of odu'a Investment Company Ibadan.from left Chief Makole Asugbeme, Nat. Treasurer NIM, Mr Adebayo Jimoh GMD Oodu'a Investment Company, Dr Olawale Cole President and Dr Uno Uwaja Deputy President during the visit of NIM mangement to the Heritage Mall under consruction by Oodua Investment recently.

Pix by Dare Fasube

CFA KRONER EURO POUNDS RIYAL SDR FRANC DOLLAR WAUA YEN YUAN

0.2753 26.1377 194.3375 240.6372 41.3012 234.0229 161.7586 154.9 233.1885 1.9501 24.3185

0.2853 26.2221 194.9648 241.414 41.4345 234.7783 162.2807 155.4 233.9412 1.9564 24.3975

0.2953 26.3065 195.5921 242.1907 41.5678 235.5337 162.8028 155.9 234.6939 1.9627 24.4764

CBN Exchange rate as at 15/06/2012 C M Y K

18 — Vanguard, MONDAY, JUNE 18, 2012

Cover Story

YOUTH RESTIVENESS AND UNEMPLOYMENT IN NIGERIA: THE WAY OUT- PART 4 WHAT GOVERNMENT CAN DO TO ACHIEVE THIS

IMPENDING FLOOD: Insurance gets zero consideration Continues from page 17 Lagos State, the flood destroyed most of his property and getting back on his feet has not been easy as well.

Mrs. Mulika Owolabi who stays in Lekki area said that the rain was terrible as it killed so many people and rendered some homeless.

She said that at that time, she had to take her four children to her husband’s brother's flat in Victoria Island because her house was flooded and most of her property destroyed.

Many of the flood victims are still very aggrieved.

Since most of them had no insurance cover, getting back on their feet has not been easy. And as it is now, not even the victims or the government has considered insurance as a means of militating against such natural disasters in future.

Accordingly, it is estimated that property worth over N100 billion may may be destroyed when the floods eventually come.

M a n a g i n g D i r e c t o r of Linkage Assurance Plc, Mr. Gus Wiggle said that the warning from NIMET notwithstanding, the public is waiting on government to carry all risk that will emanate from the anticipated flooding while not making any effort of their own to safeguard their property against peril.

He said: “You know our attitude towards insurance in Nigeria, we are not proactive enough in warding off disasters because we don’t have the insurance culture.”

Operators’ reaction Worried by this trend of events, operators in the Nigerian insurance sector have called on residents of flood-prone areas to embrace insurance in order to guard against a reoccurrence of the massive loss of property as experienced in 2011.

Most victims of last year's flood disasters which was massive in Ibadan and C M Y K

Lagos are yet to recover from the loss as majority of them had no insurance to cushion the effect. It will be recalled that the Lagos State government last month said residents of the state should prepare for at least 236 days of heavy rainfall in 2012, being the total period of rain predicted by experts. The state government added that the intensity of the rainfall would be like that of 2011, recording 1,279mm of waters with marginal error of 50mm.

Lagos State Commissioner for Environment, Tunji Bello, said the prediction was arrived at using the Seasonal Rainfall Predictions instrument, which was coordinated by NIMET. Bello said: “The natural phenomena that controlled 2011 rainfall are still in force and as such, it has been predicted that rainfall will commence from Thursday, March 22, with a margin of error of four days. It has also been predicted that the end of the season for 2012 is November 12 with a margin of error of two days; with between November 10 and 14 as probable days. The total length of rainy season for the year is approximately put at 236 days out of the 365 days in 2012 with a margin of error of two days. Like last year, Lagos will experience heavy rainfall with serious intensity.”

According to Bello, the government had designed programmes to manage the expected rain water and minimise flooding. He said the massive clearing of drainages, dredging of primary and secondary channels, lining of many earth channels and the introduction of resident drainage maintenance officers in local councils in the state, were part of efforts by the government to cope with the rains. His words: “But little can be achieved without the collaboration of Lagosians. No nation can promise a flood-free state, only reduce it to barest

minimum. We appeal that Lagosians should desist from indiscriminate dumping of refuse, drains around homes must be evacuated and building of structures on drainage alignments must stop.”

Since it appears that the government is only applying one antidote to a cause that requires an array of medications, the Chartered Insurance Institute of Nigeria, has said that there should be the inclusion of insurance as one of the needs for fighting flood hazards in the country.

President of the CIIN, Mr. Wole Adetimehin, while commending the Lagos State Government for the preparations being made to fight the menace of flood in the state, said that these environmental hazards are of great concern to insurers as they constitute threats to the insured and potential insureds.

Investigations by Vanguard to find out why people are refusing to take up insurance as a risk bearing mechanism against flood revealed that most people are still skeptical about insurance paying claims when the need arises.

Although poverty is another major contributor to why many people are shying away from insurance, the few that can afford insurance are not convinced that operators now pay claims.

Defying this argument, Chairman of Nigerian Insurers Association, NIA, Mr. Olusola Ladipo-Ajayi, said that such perception does not hold water anymore because insurers now pay claims.

Ladipo-Ajayi said that the service which the insurance industry renders to the economy and Nigerians in recent times is not just about making money for insurers but also preventing losses in the economy and the country at large.

According to a report in 234next.com, Ismail Ridwan, a senior economist with the World Bank, said, “The amount of credit needed to take Nigeria into the top 20 economies by the year 2020 would have to be generated internally.”

JOB CREATION STRATEGIES

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MTN Goodwill Automania Car Prize Presentation to the Winners Pix L- R Mr Innocent Oboh - MTN Chief Bola Akingbade Chief Marketing Officer MTN , Mr. Peter Igho Director General , National Lottery Regulation Commission , Mrs Steph Nora Okere, Nollywood Star, and Mr Kola Oyeyemi GM. Consumer Marketing- MTN Photo By Diran Oshe

Turning the dead assets most Nigerian home owners are sitting on into immediate capital which can quickly trickle down to create thousands of skilled and unskilled jobs like, carpenters, painters, plumbers, roofers, bricklayers, carpet installers etc. create or revamp their mortgage industry and create a secondary market to trade mortgage securities. This means the homes are assets that can be converted to cash or capital. If the government can help most Nigerian home owners to access the capital locked in their homes, the Nigeria government can create several trillion Naira in capital instantly. This new capital can filter through the economy and be recycled several times while creating between 500,000 to over 1 million jobs.

It is the duty and responsibility of the government and different policy makers to provide such an environment and conditions which are conducive for the youth entrepreneurial activities. Different policy initiatives encourage and motivate young people to come up with new ideas and start their own youth enterprises

• The U.S. needs 25 million barrels of oil daily, and pumps about 8 million of those barrels domestically. The U.S. oil and gas industry provides employment directly or indirectly to 9.6 million Americans. By proportion, since Nigeria pumps 2.8 million barrels of oil daily, we should have 2.8 million Nigerians employed in our oil and gas industry. The question is how many Nigerians are employed in our oil and gas industry, and how can we increase the number?

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• Sometime ago, President Jonathan spoke about the deforestation of Nigeria’s forests. Our solution to this problem can help develop our gas industry and create thousands of jobs in the process. Nigeria currently exports most of the gas we generate, and the rest that are not exported is burned off. Nigeria burns $2 billion worth of gas yearly.

That is enough to build 2,000 mega watts of power that can light up two million homes. Multiply that by ten or twenty years, and we have lost an opportunity to build 40,000

Vanguard, MONDAY, JUNE 18, 2012 — 19

On March 12, 2012, this column warned on harder times ahead. The Minister of Finance and Coordinating Minister of the economy, Dr Ngozi OkonjoIweala, has come out to say that the road ahead will be rough for the nation going by happenings in the international market place. Below is what this column said after the 2012 budget was passed.

REVISED 2012-2014 REVENUE/EXPENDITURE FRAMEWORK:

Tough and harder times ahead generate the projected income streams. But all of us know that if wishes were horses, beggars would ride. I just wonder how many Nigerians this kind of budgeting will turn into beggars by 2015.

BRIEF IMF raises Ethiopia 2012/2013 growth forecast

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Ngozi Okonjo Iweala

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he Federal Govern ment’s revised medium term revenue and expenditure strategy before the National Assembly does not appear to have any hope for the ordinary Nigerian. Rather it is a routine of the usual. Emphasis in the document is still very much on high recurrent expenditure. Little is left for investment in projects that can grow the economy and create jobs. A nation that is being ravaged by poverty needs a creative budgeting that will encourage massive investment by both the public and private sectors of the economy.

This is the known way out of poverty trap.

The medium term financial strategy envisaged that total expenditure for 2012 will be N4.648 trillion out of which capital expenditure will take N1.284 trillion while non debt recurrent will take N2.432 trillion. Total recurrent remained high at N3.716 trillion. This is the amount the Federal Government will spend on itself, employees and pay interest on loans it took from banks and other lenders.

Personnel cost alone stands at N1.658 trillion with overhead cost taking as much as N242.85 billion. Funny enough, with all the uproar that greeted the cost of governance early in the year, government has only been able to cut overhead cost provisions by about N46 billion from the N288.05 of 2011. Going by the provisions of the revised medium term financial strategy document before the National Assembly, in 2013, the government’s total expenditure outlay stands at N4.828 trillion; recurrent as usual takes the larger chunk of N3.879 trillion with N2.494 trillion as non debt recurrent spending.

Of this, N1.680trillion goes into personnel cost for payment of salaries, wages and allowances of federal civil servants while N242.85 billion is provided for overhead cost.

Capital budget in 2013 is N1.384 trillion.

This is the amount that will be spent on long term projects such as road construction, rehabilitation etc. It is this component of the budget that can grow the economy. It is small compared to the amount earmarked for recurrent. As it is in the past, not all of this capital provisions will be utilized.

Experience has shown over the years at best 60 per cent will be implemented. This will mean that there is little scope in the 2012-2014 provisions for growth not to talk of development. In 2014, a year before the next general election in the country, N4.925 trillion is provided for as the total budget expenditure. Recurrent will take N4.06 trillion, non debt N2.521 trillion, Capital spending N1.546 trillion.

Looking at these provisions, it is going to be tough for the

The major area of concern for all patriots is that the Nigerian government is spending too much on overhead instead of on capital. This policy, which encourages borrowing to finance overhead, will lead to inflation and a heavy debt burden in the next ten to twenty years.

ordinary Nigerian. Many who are at the moment above the poverty line are likely to drop into poverty between 2012 and 2014. As at last count, over 112 million Nigerians out of a population of 160 million are said to be under the poverty line, living on about N200 a day.

The import of these statistics is to bring to the fore the fact that a significant portion of Nigeria’s populace is poor and government spending pattern is not being directed to address poverty.

The question then is, what do we do with this data? How do we achieve the Millennium Development Goals of 2015 given this statistical reality and expenditure pattern?

It shows that there is a lot of

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work for the government to do to uplift a huge portion of the populace out of poverty. But with this kind of budgeting, the government is not setting the pace for job creation and human empowerment. If government continues to spend 70 per cent of the nation’s earning on less than 1 per cent of the population, it has less than nothing left for development that would lift the country out of poverty trap.

Given the burgeoning number of people classified as “poor”, as revealed by the statistics from NBS, one had thought that the relevant government agencies responsible for planning for economic development will roll up their sleeves and treat economic empowerment with a higher

sense of urgency and tact.

What is the President doing with a cloud of ministers, political appointees, and other hangers on in the corridor of power that continues to drain the nation’s purse? What about the National Assembly, why not trim their budget further to release funds for development?

The major area of concern for all patriots is that the Nigerian government is spending too much on overhead instead of on capital. This policy, which encourages borrowing to finance overhead, will lead to inflation and a heavy debt burden in the next ten to twenty years. Nigeria has moved from a deficit of N54.49 billion in 2008 to a deficit of N80.36 billion in 2009 and N1.79 trillion 2010. The Overhead of the National Assembly was 21 per cent in 2008; 26 per cent in 2009 and 25 per cent in 2010. As overhead increases, the executive spending puts pressure on inflation. As a country, Nigerian cannot keep spending and spending on overhead and recurrent. It is not good for Nigeria; more capital spending is needed.

To make matters worse for Nigerians, the entire budget process is based on the wish that oil prices remain high to

thiopia’s economy is expected to maintain a growth rate of 7 percent in 2012/2013, the International Monetary Fund said, raising its earlier forecast of 5.5 percent owing to slowing inflation. The Washingtonbased body’s growth projection is below official estimates of 11.4 percent. A visiting IMF team said tight monetary and fiscal policies have contributed to declining inflation, through the termination of central bank financing of the budget and significant sales of foreign exchange. The Horn of Africa country’s annual inflation rate fell for the third straight month in May to 25.5 percent from 29.8 percent in the previous month, according to official data. “For 2011/12, the mission projects real GDP growth at 7 percent and endyear inflation at about 22 percent,” said a statement sent to Reuters. A similar growth rate and single digits inflation are achievable in 2012/13 if implementation of tight monetary and fiscal policies is maintained.” The body warned Ethiopia last year that excessive monetary growth was the principal cause of its rising inflation, while private bank lending restrictions and a trickier business environment would slow economic growth. Back then, the IMF added Ethiopia’s budget saw a domestic financial surplus, but that there was a significant recourse to central bank financing as the Treasury bill market collapsed, reflecting high negative interest rates.

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20 — Vanguard, MONDAY, JUNE 18, 2012

Business & Economy BRIEFS 5m farmers to benefit from growth enhancement support scheme, says Agric Minister

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ive million farmers are to benefit from the Federal Government’s Growth Enhancement Support Scheme (GES) in 2012, Minister of Agriculture and Rural Development, Dr Akinwunmi Adesina has said.

The minister said this in Abuja while briefing newsmen on the roll out of fertilisers and seeds to small scale farmers. Adesina said the Federal Government was able to raise N30 billion from banks to fund the supply of seeds and fertilisers to farmers with support from the Federal Ministry of Finance and the Central Bank of Nigeria (CBN). He said that the joint effort reduced the interest rates charged for accessing bank loans from 15 per cent to 7 per cent. The minister said such development was an indication of the banking sector’s support for the the Federal Government’s Agricultural Transformation Agenda.

Construction workers hail FG’s plan for Cement Technology Institute

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orkers in the construction and engineering sector have praised the Federal Government for plans to raise about N20 billion for the take off of the Cement Technology Institute. The workers, under the umbrella of the National Union of Civil Engineering, Construction, Furniture and Wood Workers, said the step would open job opportunities for construction workers.

Chairman of the Lagos chapter of the union, Mr Adeoye Shabi, told newsmen that the institute would lead to the establishment of more cement factories. According to him, this will in turn create jobs for the teeming unemployed Nigerians. He said that the establishment of the institute would also boost the country’s income as the country would start exporting cement to other African countries.

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L-R: Jumoke Bamisaye; Olutoyin Adepate, ICAN R/CE; Folake Olawuyi; Doyin Owolabi, ICAN President & Celebrant; Soji Odukoya ICAN DR. Admin; Funmi Otitoju; Dayo Ajigbotosho, AD Corporate Affairs; Dolapo Odukoya; & Niyi Adesola during the cutting of Doyin’s birthday cake in Lagos.

FG hinges power sector reform on financial viability

BY PROVIDENCE OBUH

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any of the p r o p o s e d improvements for the power sector will not happen except we are able to improve the financial viability of the sector, says Dr. Sam Amadi Chairman of the Nigerian Electricity Regulatory Commission (NERC).

Speaking at the Nigerian Economic Summit Group’ (NESG) Policy Dialogue with the private sector, with theme: ’Appropriate Pricing and the Future of Nigeria’s Electricity Supply Industry,” Amadi pointed out that until the sector is financially viable, it will not attract the kind of capital required to improve and sustain the sector, stating that a good tariff structure should optimize revenue to ensure financial viability.

According to him, “one of the acute challenges of reform of electricity in Nigeria is financial viability of the sector.”

Speaking on tariff, he said that NERC has designed the tariff that every electricity distribution company will charge its customers in a manner that maximizes revenue and social equity.

He recalled that the National Electric Power Policy 2001 clearly identifies right pricing as key to reform of the electricity sector, noting that it provides that the tariffs in the industry should reflect the actual cost of producing, transmitting and distributing electricity.

He added that the ESPR Act 2005 requires NERC to set a tariff that allows an efficient operator to recover prudent costs. “Setting a costreflective tariff regime is not discretional. Unlike in many jurisdictions where regulators are not bound to make tariff cost-reflective, in Nigeria an effective regulator must ensure that the tariff structure

allows recovery of cost of producing, transmitting and distributing electricity.”

His words, “A lifeline tariff has been provided for poor consumers who consume not more than 50mwh per month, they will pay a flat and universal N4/mwh. They will not pay fixed charges.

“This class of consumers are benefiting from a subsidy of

N50 billion provided by the government. Residential consumers who use a single or three-phase meter also receive a bit of subsidy to avoid huge rate shock.

“Medium and small enterprises under commercial 1 are also subsidized by government and crosssubsidized by the bigger commercial and industrial consumers. The big caveat is that both the subsidy and cross-subsidy do not distort the market and do not undermine the revenue requirement of the industry.”

In addition, he noted that the Multi-Year Tariff Order (MYTO-2) succeeds in providing strong incentive for private sector investment in the value-chains of electricity including the off-stream sectors of the industry without undermining the affordability of electricity by the urban and rural poor.

“It has properly priced the critical components of efficient services in the industry, including fuel costs, losses, O & M costs and metering to ensure sustainable improvements.

“What is required is a regulatory compact between the regulator and the utilities that clearly outlines service delivery benchmarks and the requisite capacity to enforce such compact. I believe NERC has such capacity and will enforce the service implications of MYTO-2,” he opined.

ARCO Petrochemical profit rises by 41.96% …deploys two fast crew boats

BY KUNLE KALEJAYE

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RCO Petrochemical Engineering Company Plc profit after tax increased by 41.96 per cent from N279.67 million in 2010 to N397.007 million in 2011.

Chairman of the company, Mr. John Akpieyi, made the disclosure at the 29th Annual General Meeting of the company held in Lagos.

According to him the pretax profit grew by 23.74 per cent from N378.79 in 2010 to N468.74 million in 2011, noting that the stellar performance was due to significant reduction in interest and bank charges as well as sustained cost reduction program of management.

The company’s assets base stood at N6.6 billion,

Akpieyi said, adding that it has maintained a dividend policy that balance the dual objectives of appropriately rewarding shareholders through dividends and reinvesting profit to support future growth of the company.

The board presented to shareholders for approval a dividend pay out of 8 kobo per share out of the profit made by the company as at 31 st March 2011, which represents a dividend growth of 300 per cent over that of 2010.

Akpieyi also informed shareholders that ARCO Marine and Oilfield Services Limited, a member of ARCO Group, recently delivered two fast crew boats with speed over 30-knots under the N5.7 billion contracts awarded to

the company by Total Exploration and Production Nigeria.

“The boats have since started full operation and a third one is on its way to being deployed to Total operation,” adding that preliminary assessment from operators of the boats in deep water oil and gas sector was satisfactory. Another 70 passenger fast crew boat would be delivered within the next three weeks while additional two boats would arrive in the second quarter of 2013,” Akpieyi said.

He assured the shareholders of ARCO’s determination to invest in the future growth of the organization to enable it to catch up with the huge opportunities brought about by the Nigerian Content Law.

Vanguard, MONDAY, JUNE 18, 2012 — 21

Business & Economy

Nigeria needs sustainable food production facility —Netherlands envoy

BY PROVIDENCE OBUH

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he Netherlands high commissioner to Nigeria, Mr Bert Ronhaar has called for a sustainable food production facility in relation to the increased need for good food production worldwide.

Ronhaar who made this assertion in an interview with Vanguard, during the Business Day Agribusiness food security summit 2012, called on the Federal Government to cooperate with the private sector and other bodies to achieve great result in agriculture.

He said “the Netherlands has ranked number one in terms of export in horticulture and number two in agriculture and food production worldwide. He by working together as government, as private sector and as research institutes, made our nation great in agriculture, horticulture and flour production.”

Continuing, he said, “that is for a small country like Netherlands, Nigeria is a big country, big nation, there are lot of potentials and the need worldwide is very great for improved food production and I think Nigeria need more of good quality food, sustainable food production facility, because we can not exploit our industry.

“That is why we have to make sure we maintain the quality of the soil because in Nigeria we see a lot of

fertilizer users, but if you do not have the proper soil management programme in place as a farmer, then you might have for five years increased production and the soil will be depleted and it will be very difficult to make it good again. So that means there is need for conservative effort from everyone to increase production.”

He pointed out that in the Netherlands, the government provides the enabling environment for the private sector and for the farmers

while the industry do the investment.

Speaking on NigeriaNetherlands ties, he said that the two countries have a common relationship on investment in agriculture and food production through Public Private Partnership.

“Our government is working with Nigeria government on the improvement of cocoa production because in the past, Nigeria was a major cocoa producer. I think as a result of the oil industry and the interest of the people for

money, the cocoa industry collapsed and there was sickness in the cocoa tree.”

However, he assured that there is room for Nigeria to become a major producer of cocoa, adding that it has put cassava programmes in place.

“The overall trade balance between Nigeria and the Netherlands is around 67 billion euro and for Netherlands, Nigeria is the largest trading partner in subSaharan Africa but twice as big as South Africa and for Nigeria, the Netherlands is the major exporting country,” he said.

L-R: Legal Adviser and representative of the Rector, Institute of Management Technology (IMT), Enugu, Barr. Valentine Adukwu; student and raffle draw winner, Mr. Okechukwu Agboh, and Manager, Youth Segment, Etisalat Nigeria, Mr. Idiare Atimomo during the presentation of a brand new Hyundai i10 car at the Etisalat Cliqfest campus tour at IMT, Enugu on Wednesday June 13

Julius Berger Nigeria acquires German subsidiary J

ulius Berger Nigeria Plc has concluded arrangement to purchase a majority stake of Julius Berger International GmbH (JBI) in Wiesbaden, Germany.

Announcing this development in a statement in Abuja, Mr. Clement Iloba, the Public Affiars Manager of JBN, said, "this week an agreement between the vendor Bilfinger Berger SE and JBN was signed, to acquire 90 per cent of the shareholding of JBI. The acquisition is split into two tranches, 60 per cent end of June 2012 and 30 per cent end of December 2012."

He said, “JBI brings together the engineering and services activities of Bilfinger Berger Nigeria GmbH. By purchasing a majority share of JBI, JBN is assured keysupport in planning, procurement and capacity

building.

“The Board of Directors and the Executive Management of JBN reiterate their confidence that these strategic business directions would achieve a sustainable increase in JBN’s efficiency and responsiveness, as well as set the basis for a future of long lasting success.

Julius Berger Synopsis “Julius Berger Nigeria Plc is a Nigerian construction company headquartered in Abuja FCT An employer of no fewer than 18,000 people of close to 40 nationalities, it is a multi-service, solutionsdriven company is unique in its long standing delivery of quality, capacity, reliability and excellent performance, all at internationally recognized standards.

“Since its 46 years of operation in Nigeria, integrity, transparency, safety and sustainability continue to

be the pillars of JB’s structures and behaviors, both internally and externally.

Julius Berger is the leader in its field, a pioneer in

technology and a committed partner in the development and progress of Nigeria.”

FCTA to establish MFBs In area councils

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he Federal Capital Territory Administration (FCTA) will establish microfinance banks in the six Area Councils of the territory to provide easy access to financial services for the administration’s business operators, the Minister of State for FCT, Oloye Olajumoke Akinjide, has disclosed. The minister, who stated this at the commissioning of HATLAB Place in Abuja, explained that the establishment of the microfinance banks would substantially address the funding limitation of micro, small and medium enterprises (MSMEs).

“Needless to remind that inadequate funding of micro, small and medium enterprises (MSMEs) affects positive economic growth. I once more use this opportunity to reaffirm our commitment towards the establishment of FCT Microfinance Banks in all the Area Councils of the FCT. We are also positioned to encourage value addition and linkages and ensure the establishment of business clusters, trade zones and business incubators in the FCT through the Abuja Enterprise Agency (AEA),” she said.

BRIEFS Institute recommends project management platforms for engineering

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he Institute of Appraisers and Cost Engineers has recommended the inclusion of project management platforms in major engineering projects in the country. The institute, a division of the Nigeria Society of Engineers (NSE), said such platforms should also include a sensible application of cost engineering and principles of engineering economy.

It made the recommendation in a communiqué issued in Abuja at the end of its National Technical Conference and signed by the Secretary, Mr Ike Iwenofu.

The communiqué said that professional valuation, cost engineering and engineering economy principle should be properly applied to Nigeria’s social and economic activities. It added that this would enhance economic growth and promote sustainable development.

The communiqué observed that the failure of major engineering projects in Nigeria was due to nonapplication of cost engineering.

CBN workers persuaded Sanusi to come to work in regalia – spokesman Central Bank of Nigeria (CBN) Governor Sansui Lamido Sanusi appeared in office wearing a chieftaincy garb because workers persuaded him to do so, the bank’s spokesman said.

Sanusi was turbaned the Dan Maje Kano by the Emir of Kano, Alhaji Ade Bayero.

Some national newspapers published a photograph of Sanusi wearing his chieftaincy regalia with some bank officials at the bank’s corporate headquarters in Abuja CBN spokesman Ugo Okoroafor said the apex bank’s governor was “not on duty” the day he appeared in office in the regalia. He said, “For the avoidance of doubt we want to use this medium to state that the CBN Governor was on a short break, and was not on duty on the said day.

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22 — Vanguard, MONDAY, JUNE 18, 2012

Banking & Finance BRIEF UBA launches MasterCard Verve debit cards

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n line with its commitment to offer best-in-class e-products and payment services, United Bank for Africa (UBA) Plc, Africa ’s global bank, has introduced MasterCard Verve debit cards for the banking convenience of its esteemed customers.

The UBA MasterCard Verve is a naira-linked Debit card that works well on all ATMs, PoS and Internet payment platforms even as it provides cardholders the benefit of spending up to $40,000 or equivalent of their local currencies per year anywhere in the world.

The Divisional Head, eBanking, UBA, Dr. Yinka Adedeji, said UBA, with the introduction of UBA MasterCard Verv e , h a s continued to innovate and improve on service delivery for the convenience to its customers. “With UBA MasterCard Verve customers do not need to change their local currency to any foreign currency on the streets any longer whenever they plan to travel either for business or Whenever you travel outside Nigeria to any location in Africa, Europe, Americas, Asia or anywhere around the world. The MasterCard Verve allows you to spend up to $40,000 or equivalent per year,” he said.

According to him, UBA MasterCard Verve is linked to a Naira Account only and could be used for purchases on local and international websites such as Apple, Amazon, among others.

Besides, the Card is accepted at over 30 million merchant locations worldwide while other value added services include Bill Payments (DSTV, PHCN) and Mobile Recharge Top-up.

He maintained that the introduction of the MasterCard Verve by UBA would boost the cash-lite initiative of the Central bank of Nigeria by strengthening the protection against fraudulent activities.

“Applicable limits have been put in place for customers’ transactions within 24 hours in order to protect them from card-related fraud. However, any customer who desires to change any of these advised limits to suit a peculiar profile can visit the nearest UBA branch to fill a Debit Card Limit Increase form,” Adedeji added.

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BY BABAJIDE KOMOLAFE AND ELIZABETH AMIHOR

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ormer Head of State, Genral Yakubu Gowon has risen in defense of the autonomy of the Central Bank of Nigeria (CBN) saying the apex bank should not be subjected to legislative or executive control.

Speaking at the 4 th Memorial Lecture of the Clement Isong Foundation for 2012, Gowon said, ”I firmly believe that the independence of the CBN should be preserved and that the CBN should not be subjected to control by either the legislature or executive so as to grow the economy.”

He reinforced his view with an experience with the late Dr. Clement Isong, who was Governor of the apex bank from 1967 to 1975.

He said, “Clement Isong was one of the few officials of government cleared to speak with me on the ‘hotline’, a red phone with a secure line that is only to be used in real emergency situations.

"He called me on a busy day to request audience with me but declined to discuss the topic on phone. He almost frightened me with his insistence on coming to see me; "I, therefore, promptly cancelled my pending engagements in case there was need to call in other advisers, for I wondered if something had terribly gone wrong with the CBN. "Before his arrival, I had begun to worry about how we would be able to meet our international obligations, pay public servants or implement other programmes in the event that the CBN crashed.

When he stepped into my office, he wore a very broad smile.

"Governor, what’s the problem?’ I asked. Then he told me: “Your Excellency, I’ve got so much money, I don’t know what to do with it.” You can imagine my shock. Then I said to him, ‘’if you have so much money, why don’t you pave the streets of Lagos with it?

“Let us not miss the import of my exchange with my Central Bank Governor. At the time, we had put in place the 3 rd National Development Plan, 1975 - 1980, which would have ensured the rapid transformation of Nigeria to a politically and socioeconomically strong nation.

"There was so much to do, but the abandonment of the Development Plan by successive administrations turned it to a missed opportunity for development.

What was regarded as ‘so much money’ then is mere pittance today. For a fact, Clement Isong would never have allowed this money to be frittered, just as I would never have permitted the squandering of the common wealth.

Pix From Left; Mr Olusegun Oloketuyi, Non Executive Director, Mallam Abubakar Jimoh, Managing Director, Chief Executive Officer, Associated Discount House Limited, Mr Aigboje Aig-Imoukuede, Chairman Associated Discount House Limited, and Mr John Akujieze, Company Secretary, During the 18th Annual General Meeting of Associated Discount House Limited, Held on Friday 15-6-2012, lagos. PHOTO; Kehinde Gbadamosi

CBN shouldn't be subjected to legislative or executive control — Gowon “I have recalled this anecdote to reinforce my fundamental belief in the independence of the Central Bank of Nigeria, whose current Governor, Sanusi Lamido Sanusi, by some happy coincidence, is the Guest Speaker at this event.

Sanusi Lamido Sanusi, always a newsmaker and ever

full of surprises, really stunned everyone with his robes of Dan Majen Kano, which he wore to office on Wednesday. Perhaps, he is giving us a dress rehearsal for life outside of CBN. “The CBN, under such eminent Governors as Aliu Mai Bornu, Clement Isong, Mr. Ola Vincent as well as new

generation Governors like Prof. Charles Soludo and Sanusi Lamido Sanusi, have at various times creditably discharged the onerous responsibilities of their office. I also commend the courage of the current Governor for speaking out in defence of the independence of the CBN.”

First Bank unveils single digit interest rate funding for SMIs

BY BABAJIDE KOMOLAFE

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irst Bank of Nigeria PLC has unveiled a framework for single digit interest rate funding for small and medium industries in the country.

Under the framework, which is in partnership with the National Association of Small and Medium Industries (NASI), First Bank will provide loans to SMIs who are members of the Association at nine per cent interest rate.

Speaking at the MoU signing ceremony last week, Group Managing Director/ Chief Executive, First Bank PLC, Mr Bisi Onasanya said that , “This scheme and MoU signing is not about profitability. The nominal interest rate that we would charge, which is at single digit interest rate, is just to make sure that we cover basic

cost of funds that are being deployed.

This MOU is in furtherance of the Bank’s support for Small and Medium Scale Enterprises and it is meant to promote the growth and development of SME industries and industrialists in Nigeria.

This MOU also supports the Bank’s strategic focus on financial inclusion as it would mitigate the challenges of credit delivery to the unbanked market segment through mobilized funds which will avail credit facilities to registered NASSI members at concessionary rate.

In addition to warehousing and disbursing mobilized deposits, FirstBank is also committed to support NASSI through business advisory services, capacity building and development of relevant IT infrastructure as well as the issuance of our bio-metric

identity card to all NASSI members.

You can rest assured that the Bank has immeasurable capacity to deliver on this business partnership, given our 118-year heritage and business practices which have sustained FirstBank as the number one bank in Nigeria in various financial metrics such as total gross earnings, total assets, total loans and total deposits.

“The greatest impediment to the development of small and medium enterprises in Nigeria is access to finance.

Unfortunately banks have found themselves in a position where they all rush to lend to those firms that do not need to be so supported.

We all rush to give money to multinational companies, who if we are not careful will take those loans from us and plow them back into money market instruments.

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32 —Vanguard, MONDAY, JUNE 18, 2012

Interview

We bought performing loans from banks to save them from collapsing — AMCON NKIRUKA NNOROM

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t the height of the financial crisis that rocked the glo bal economy in 2008, Central Bank of Nigeria pressed for the realisation of the Asset Management Corporation of Nigeria which had been in the pipeline for years. The company was set up to buy non performing loans from banks. It has performed the function to some extent, but there are still issues in the financial services sector to be resolved. Managing Director of the company, Mr. Mustapha Chike-Obi spoke to Financial Vanguard on some of the issues Excerpts

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ly worried about it.

You once said that you are looking for advisers to advise you on the sale of the nationalized banks. How far have you gone with that project?

First of all, the banks were not nationalized. So, I reject that claim of nationalisation.

The fact that the banks are owned by public institution does not mean that they were nationalized.

What was done to them?

They were bridged, which is a lawful exercise in the NDIC’s Act and recapitalised

by AMCON, which is also a lawful exercise in the AMCON’s Act. None of those acts is nationalisation. I have made it very clear; nationalisation is a process that leads to public ownership, but the fact that a company is owned by a public institution does not mean that it is nationalised. The example I give is, if the CBN building is owned

by CBN, which is a public institution, does that mean that the CBN building was nationalised? There are many ways that public institution could be owned by government, but

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Let me start by asking you what your thought is on the move by the National Assembly to strip the Central Bank of its autonomy Am not sure there is a move to strip the CBN of its autonomy. I think the National Assembly is only reviewing the CBN’s Act. There are some ideas that have been put forward, but it is completely unadvisable to tamper with the autonomy of the CBN. It is not the best practice. The whole world has gone to the level of an autonomous, independent Central Bank essentially for economic growth.

The National Assembly is still gathering information. So, I think that when they finish gathering the information, and they hold public hearing, am hopeful, they will arrive at the correct decision. The way to deal with the CBN is not by tearing the economy apart. I am certain they will come to the right decision.

And if by chance there is a review of the Act that finally tampers with the autonomy, how do you think that will affect the economy In a simple way, it will be disastrous. The National Assembly cannot do a worse thing than tamper with the CBN’s autonomy. So, I am very confident that they will not do that. I don’t want us to speculate about any problem; they are doing their job, they are gathering information, and they are listening to people. When they are through with gathering information, I am very confident that they will do what is right for the economy. So, I am not real-

yet they are not nationalization. Be it bridging or recapitalisation, both of which are legal under their respective laws.

So, on my initial question, on the proposed sale of those banks, how far have you gone?

We have kicked it off. We have advertised for advisers.

Well, we are not advertising for advisers for a sale. We are looking for advisers to tell us what to do with the banks to get maximum value. Everybody assumes that means to sell. It might mean going public with those banks; taking them to the stock exchange as in public offering so that Nigerians can own the banks again. So, we are looking for advisers to tell us the best thing to do. It may well be that a sale is the right thing to do. In that case, we will consider a sale, but right now, we are just looking for advisers to re-evaluate the banks and then tell us the best way of exit without affecting the financial market, and yet get the best value from it.

There are some people that believe that those banks are not yet matured for sale.

How healthy are they to attract new core investors That’s why we need advisers. When the advisers look at them, they will tell us if they are ready or not. They will tell us whether to keep them; whether to merge them, whether to sell them, whether to go public; all of these.

They will tell us what to do with the banks, and when they tell us, we will consider

There are many ways that public institution could be owned by government, but yet they are not nationalisation. Be it bridging or recapitalisation, both of which are legal under their respective laws

,

Mr. Mustapha Chike-Obi ...right now, we are just looking for adv

then tell us the best way of exit without affecting the financial the experts’ opinion. There is no point me and you guessing whether they are ready for sale or not. We will get very competent advisers and they will tell us what we should do. They will tell us what steps to take to get the best value.

Up till now, nobody has said anything concerning the shareholders of those banks; the people that lost money in those banks. What is going to happen to them?

You need to be very careful when you talk about shareholders. There were shareholders in Bank PHB; there were no shareholders in Keystone bank. We did not buy Bank PHB. We recapitalized Keystone bank. Keystone bank is a completely different entity from Bank PHB. So, the people that were shareholders of Bank PHB who had issues with what happened, their issue is with the NDIC. It was the NDIC that bridged their bank, and when they bridged their bank, they cre-

ated a new bank called Keystone bank. AMCON’s interaction with Keystone bank has nothing to do with Bank PHB. As a matter of fact, AMCON was the largest shareholder in Bank PHB before it was bridged; larger than Habib bank which was the second largest shareholder. So, we lost more as an institution than any other shareholder, and so shareholders that have a problem should address that with the NDIC. Let me say this, I think the NDIC did the right thing. These banks had failed as institutions. The depositors’ funds were in danger; and the only thing NDIC could do was to act in the best interest of the depositors as the law compels them to do. They must protect the depositors, which is what the law tells them to do. A bank like Bank PHB had negative capital of over two hundred billion (N200 billion), so what exactly did shareholders own. It was worth negative two hundred billion or more.

So, there was nothing they lost; they lost their shareholding two years ago, not when it was bridged. When it was bridged, the bank was in danger and depositors needed to be saved.

But some shareholders still believe

Vanguard, MONDAY, JUNE 18, 2012 — 33

Interview

,

If you have a deposit in the bank, and the deadline is September 30, will you wait till that day to take your money out? No! All the government agencies will have taken their money out

that they should have been asked to recapitalise their banks instead of bridging them But that’s what they say. You see, you reporters have a duty to report the truth. The banks were intervened on in 2009. CBN gave them two years to recapitalise the banks, they didn’t recapitalise for two years. It was extended to 30th September, 2011. They still hadn’t made any progress to recapitalise them. When are they going to recapitalise, forever? They were given over two years to do this and they didn’t. That’s the fact and then, in addition to that fact, Union Bank just had a rights issue as part of its recapitalisation exercise where they asked the original shareholders to bring a small fraction of the money required and they didn’t. The rights offering had to be cancelled, only AMCON subscribed to the right offering. The shareholders didn’t. So, when people tell me that they should have given them chance to recapitalise, they are not being honest with the fact.

However, if anybody wants to recapitalise any of the bridged banks on the same basis that AMCON did, they are welcome. We will sell to them

tember 30th recapitalisation deadline.

It is like somebody walks in now; your husband walks in now and says ‘I want to eat and you say what do you want to eat and he says rice and you say okay.’ Then he says ‘where is the rice’. If he is asking for rice now, he knows that it will take may be an hour before it will be ready.

So, if you want to hit the deadline, you should not wait for September 30. By July 15th, you know there will be no transaction that can happen

by September ending. Here is the danger, if you wait till September 30th, other people know it; by September 15th, there will be a run on the banks that you will never believe. If you have a deposit in the bank, and the deadline is September 30, will you wait till that day to take your money out? No! All the government agencies will have taken their money out; institutions will have taken their money out.

There will be a run on the bank and that is exactly what we cannot afford. So, once we got to July 15th, everybody knew that the September 30th deadline has been breached.

Every single bank that was not bridged had signed MoU

by July 15th. So, there is a problem, if you wait till Sep-

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visers to re-evaluate the banks and market

as many shares as they want on the same basis that we recapitalised the banks. So, anybody that tells you that they want to recapitalise the banks, there is an open invitation. We will show them the term that we used to recapitalise the banks and they are welcome to join me on that basis.

If you are saying that anybody that wants to recapitalise any of the banks is free to do so, does it mean that the bridge option can be reversed?

No! The shares are now owned by AMCON. We paid for those shares. If anybody wants to buy those shares from me, any ex-shareholder of any of those banks that wants to buy the shares on the same term that we bought them, he is welcome. Any! So, if they want to help me recapitalise those banks on the same term I did, I give them an open invitation to come and do so. But I assure you that they won’t come.

But sincerely, don’t you think that CBN and NDIC should have allowed the September 30 th deadline to elapse before bridging those banks First of all, let explain something to you. To recapitalise a bank is not something you go to the market and do in one day. To recapitalise a bank takes a number of steps. Let me tell you what it takes. It takes issuing a Memorandum of Understanding; that has to be approved by the board of directors. Then from there, you go to what is called Transaction Implementation Agreement; that also has to be approved by the board. Then, you take that to the Securities and Exchange Commission and you go to the court; then you have court-ordered sanction, approval of the Transaction Implementation Agreement. When the court approves, you go to SEC, then SEC must approve. So, the whole process takes somewhere in the best case, a minimum of three months- from the MoU to the conclusion.

So, when you get to the middle of August or middle of July and there has been no MoU signed, you know that there will be no transaction by September 30th. It is impossible.

So, when they say September deadline for recapitalisation, that doesn’t mean September deadline for MoU. It means MoU should have been signed in March to meet Sep-

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huge loses. What do you want us to do? I will give you another fact. AMCON owned 80 per cent of Spring Bank shares by the time it was bridged.

The largest shareholder of Spring Bank was AMCON. So, in terms of who lost the most money by the bridging, it was AMCON. Now, on the issue of Union Bank’s recapitalisation, if you had listened to SEC’s presentation at the House of Reps hearing, SEC commissioners alleged that AMCON coerced them to clear Union Bank for recapitalisation.

What do you have to say to that?

Let me ask you a question.

How can AMCON coerce SEC? SEC is a regulator, AMCON is not. In what possible way can AMCON coerce … (cuts in) it was an allegation I understand. I am asking you; if I allege tomorrow that you jumped out of this building, people will laugh at me.

Some allegations don’t make sense. AMCON doesn’t have any coercive power over any regulator. We don’t have any regulatory power. How can we coerce SEC into anything?

Moreover, the SEC DG is on my board of directors, she is one of my directors! How can I coerce her into anything? So it makes no sense. Now, the Union Bank transaction, what part of it was coerced? I don’t understand. What part did they say that we coerced them to agree to?

Okay, there was an allegation that the proceeds of their last public offering before the bank's crisis was unaccounted for and because of that, they refused to accent to recapitalisation of the

If investors lost money, it is unfortunate, but that is what investment is. I have invested in businesses that went bankrupt and nobody asked the government to come and bail them out

tember 30th, the banks will be liquidated. That is what people don’t understand. They hadn’t even done the first step to capitalisation, and you say we should wait for September 30 th ? That would have being irresponsible, and they knew it. And what you don’t know which they don’t tell you is that Afribank’s board of directors wrote to CBN and told CBN, ‘please ask AMCON to recapitalise us’. There is a letter to that effect. The MD of Spring bank came here and asked AMCON to recapitalise the bank because it was making

,

bank Let me say something. First of all, before AMCON came into being, there was public offer by Union Bank and there was an allegation that they did not use the proceeds of the offer for the purpose of the offer. That’s the allegation. We have letters to save us from Union Bank in the market.

AMCON’s only job is to fill the loss; to recapitalise these banks to zero in order to facilitate the M & A (Mergers and Acquisitions) transactions. So in the end, the bottom-line was that the proceeds were used by Union Bank alleged-

ly as working capital. Whatever it was used for, there was a negative equity in Union Bank. AMCON’s only job was to fill the negative equity.

There was negative equity from people who did foolish things. It is not our job to pry on that. The bottom-line is that we wrote a letter to SEC, for whatever purpose that was used; we are going to fill the negative equity to facilitate the merger transaction. That’s our job. That was what we did.

Now, it is entirely impossible; there is a long history. (I wish the lawyer was here, I would have shown you the file, back and forth, of the whole issue), but in the end, it was irrelevant. What does it matter that Union Bank misused N5 billion of the proceeds of the public offer it did five years ago.

Is it because you are going to make…, Union Bank is a big bank, and because the last MD used the proceeds badly, you are going to hold up the recapitalisation? How many people does Union Bank employ? Ten thousand people; had a minimum of 1.2 million customers, and a deposit of N500 billion. You are going to put all of that in jeopardy because there was some bad behaviour for which the man..., I think they are in court. Look, everything that I know and I think that was the fact was done for the interest of Nigeria’s financial system, the depositors and the employees.

Those were the three major people that were considered.

If investors lost money, it is unfortunate, but that is what investment is. I have invested in businesses that went bankrupt and nobody asked the government to come and bail them out. Why stop at banks, why are they so emotional about banks? How about if you have a Hotel and it goes bankrupt, should government bailout the business? How about if you have an airline? Are we going to bailout Dana Airline?

Dana Airline is probably going to be in financial difficulty. We have airlines- Bellview for instance, they lost all their money. Should we bail them out out? So when investors keep making this petition, there is no government anywhere in the world that will ever agree that it is its job to bailout an investor who has lost his money. No where! But government tells people, ‘go and put your money in the bank so that when you go to get the money, it will be safe.’

And so, if we didn’t do that, the banking system will collapse. You will have your inlaw who will tell you one day to give him money to start tailor business and it may not work. Should the government give you the money back? I have never understood this investors’ issue about how investors feel that it is government’s job to give them back the money that they lost.

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Banking & Finance

BY BABAJIDE KOMOLAFE

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ound-tripping of foreign exchange from the official market to the parallel market as well as activities of speculators are some of the factors behind the recent depreciation of the naira says Financial Derivatives Company Meanwhile, cost of funds rose sharply in the interbank money market due scarcity of funds which intensified during the week.

According to Kakawa Discount House weekly interbank newsletter, the market ended with deficit of N78.21 billion, down from N32.94 billion the previous week. The scarcity of funds was aggravated by N94.475 billion withdrawal to fund foreign exchange purchase at the bi-weekly official foreign exchange auction. The impact of this further drop in market liquidity is reflected in the data from Financial Market Dealers Association of Nigeria (FMDA), which showed that

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Round-tripping, speculations behind naira depreciation — FDC *Interbank interest rate rises as scarcity intensifies interest rate on Call lending, 7-Days and 30-Days lending rose by 83 basis points. Interest rate on Call lending closed at 15.79 per cent, up from 14.88 per cent on Monday, while 7-Days and 30-Days lending closed at 16.04 and 16.25 per cent from 15.21 and 15.58 per cent respectively.

In the foreign exchange market, the naira further weakened at both the interbank and official segment of the market. At the official market, the naira depreciated by six kobo as the official exchange rate rose to N155.9 from N155.84 per dollar. The naira depreciated by 26.25 kobo as the interbank rate rose to N163.21 from N162.95 per dollar.

Since May 26th the naira depreciated persistently at

the bi-weekly auction as the exchange rate rose steadily from N155.69 per dollar to N155.9 per dollar on Monday.

Similarly, the naira depreciated by 386 kobo as the interbank rate rose to N163.21 per dollar last week from N159.35 per dollar on May 23rd.

The Financial Derivatives Company explained the factors driving the depreciation of the naira in its monthly economic publication for June. It said, “ We believe that the weakening of the Naira includes a combination of several factors: Multinationals who have declared dividends have increased their demand for forex for the purpose of repatriating earnings; Speculators besieging the market to take positions, due to their expectation of a weak-

er currency as a result of the declining trend in oil prices; i.e. lower oil prices will result in a slowdown in external reserves accretion and the ability of the CBN to continue its support of the Naira; The divestment of international investors’ funds from high yield government securities is increasing the demand for forex; Round-tripping between the official and parallel market. The spread between parallel and official rates has widened to levels last seen in December 2009 and early January 2010. The gap between the official spot rate and the parallel cash rate is currently N9.1, from a low of N2.94 in March.

The recent Monetary Policy Report (MPR) clearly evidences the fact that the CBN

is seriously concerned about the risk of a potential depreciation in the Naira, as a result of the recent developments in the international commodity and financial markets. This concern is understandable as the Nigerian economy is heavily de-pendent on oil, the possibility of a softening in crude oil prices with potential fiscal revenue losses could lead to renewed pres-sure on the exchange rate.

If the weakening in the Naira persists, which we expect, then the nation’s forex reserves could deplete even faster than the CBN anticipates. The market would likely see such depletion as a sign of weakness which could lead to a further increase in currency speculation.”

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Corporate Finance

Stock market: Why market makers can’t survive — Stockbroker STORIES BY PETER EGWUATU

T

he inability of the Nigerian stock market to bounce back to reckoning has been attributed to lack of capacity of the market makers to provide the much needed liquidity.

A leading and prominent stockbroker, who spoke to Vanguard on condition of anonymity, faulted the regulatory authorities for the selection of the market makers.

According to him, “How can the regulators select firms that are highly indebted to act as market makers? Where will they get the funds from to pump into the market? The market has been affected by illiquidity. How could people who are chronic debtors be appointed as market makers when there are some operators that are financially clean that were not considered to play the role of market making?

Continuing, he said, “The appointment of the market makers was highly politicized and not done in a transparent manner. It is really nonsensical for regulators to appoint people that have no financial muscle to provide the needed liquidity that would revive the market.

There are just about three firms that are capable to play the role of market making, the rest are not competent.

When asked the firms that are competent for the role he said, “I think it is only FBN Capital, Stanbic IBTC, and Renaissance Capital. If we must grow the market then issues like appointment of market makers must be based on facts rather than sentiment.”

It will be recalled that the Nigerian Stock Exchange (NSE) released the names of 10 market makers that are expected to boost liquidity in the capital market.

Speaking during the unveiling of the companies, the Chief Executive Officer, NSE, Mr. Oscar Onyema, said that this was another milestone in the history of the Nigerian capital market.

He said that the move was important as it was geared towards bringing back liquidity and depth into the market, which had been identified as the second largest market in subSaharan Africa.

A market maker is a dealing firm, which maintains firm bids and offers prices in a

given security by standing ready to buy or sell that security.

According to the NSE, the 10 stockbroking firms were selected from a list of 20 that had applied last year.

The market makers as announced by the NSE are Stanbic IBTC; Renaissance Capital; Future View Securities; Vetiva Capital; ESS/DunnLoren Merrifield; WSTC; Capital Bancorp; FBN S e c u r i t i e s ; GreenwichSecurities and CSL Stockbrokers.

Onyema said, “This is a great milestone and a major step in the direction of turning the market round to bring liquidity and depth back into the market. We will continue to move forward on this. The companies selected went through a very rigorous process and met the minimum net capital requirement of N570 million, we also examined their compliance history and looked into their operational capabilities including their technology and processes.”

He added further that the selected firms were taken through trainings, debated the appropriate market structure to be used and the Exchange further went through the approval of the Securities and Exchange Commission in the selection process.

A major highlight of the unveiling was the selection of a basket of quoted companies in which the financial intermediaries would provide the desired level of liquidity via a blind draw.

The Exchange added that the primary obligation of the Market Maker was to always make a two-way price in each of the stocks in which they make markets.

From left: Benson Uwheru, Senior Consultant, Risk and Capital Management, Deloitte West & Central Africa; Demola Adeniran, Director, Risk and Capital Management, Deloitte ,West &Central Africa; Richard Kirkland, Risk Consulting Partner, Deloitte, New Zealand and Klaas Stijnen, Consulting Senior Manager, Deloitte, New Zealand, during the Deloitte Risk Academy, Risk Intelligent Platform in Lagos.

Standard Chartered tasks investors on portfolio diversification

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ith the illiquidity in the equities sector of the Nigerian capital market, investors have been advised to review and diversify their investment portfolio to enhance returns on their investments.

Speaking at its wealth and leisure event organized for its priority customers by Standard Chartered Bank, Nigeria, in Lagos, the Head Consumer Banking, West Africa, Carol Oyedeji noted that the event was designed to enhance the bank’s customers’ value proposition especially in the areas of investments and leisure.

According to her, the event provided the bank the opportunity to deepen its relationships with customers and enhance the bank’s customers’ value proposition.

“The priority and international banking team of Standard Chartered Nigeria, in partnership with Porsche Nigeria, decided to host its

customers to a lifestyle event tagged ‘Wealth and Leisure’ to further help them bridge the gap between work and leisure ,” Oyedeji said.

“We are in the business because of our customers. We believe they deserve the better banking experiences and relationship that foster sustainable developments and success in their respective businesses. At Standard Chartered customers are a priority and we continually strive towards ensuring higher quality service that surpasses their expectations. This is one way we reinstate that we are here for their progress and indeed here for good,” she added.

On his part, the former Governor of Cross River State, Mr. Donald Duke while speaking on the topic, “Living Great”, enjoined the participants to seek opportunities to relax rather than allowing others reap the fruits of their return on

investments.

To him, seeking pleasure in doing what we love most and finding opportunities to relax and doing it would enhance people’s lifestyles and thus increase productivity.

The event which held at the new showroom of Porsche Nigeria is the first of several events planned for customers for the rest of the year, in which customers were treated to sessions on lifestyle improvement and given opportunities to test drive some of the latest vehicles from the Porsche Franchise.

Standard Chartered remains one of the top rated financial institutions to be reckoned with both in Nigeria and internationally. The Porsche brand symbolizes affluence, wealth, luxury, elitism and status. These are attributes associated with priority customers and as a result, we feel that the bank’s customers as well as the bank would greatly benefit from this partnership noted Julian Haedy, General Manager, Porsche Centre, Lagos.

BRIEFS US Airways seeks support of shareholders for AMR deal

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he top executive of US Airways Group Inc (LCC.N) sought to bolster shareholder support on Thursday for a proposed merger with bankrupt American Airlines, saying the financial community already likes the idea and that the two airlines would make a strong combination.

Speaking at the No. 5 U.S. airline’s annual shareholder meeting in New York, Chairman and CEO Doug Parker said a tie-up with American would create “an airline that can compete with anyone, that can be the best airline in the world.”

The meeting was broadcast over the Internet.

US Airways disclosed its interest in merging with American in Januar y.

American’s parent, AMR Corp (AAMRQ.PK), filed for bankruptcy protection in November of last year.

Cognizant enters $330m deal with ING

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nformation technology services provider Cognizant Technology Solutions Corp said it entered into a $330 million deal with the U.S. unit of Dutch insurer ING Groep NV to expand the business process management contract between the two companies.

Under the deal, Cognizant will purchase ING’s facility in North Dakota and sub-lease some of the insurer ’s offices in Iowa. More than 1,000 ING U.S. employees will be transferred to Cognizant under the seven-year deal.

The new center will be an integral part of Cognizant’s global delivery network and will allow the company to provide an expanded range of business process services in the insurance and financial services industries, the IT services firm said.

Cognizant will provide “a comprehensive array of insurance business process services” to ING U.S., a provider of retirement, investment management and insurance services.

Shares of the Teaneck, New Jersey-based Cognizant were up about 1 percent at $59.18 on Thursday on the Nasdaq.

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36 — Vanguard, MONDAY, JUNE 18, 2012

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FDI: Asaba Airport as case study – 4 "Go West my son..."

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hat was the advice of thousands of parents to their sons at the beginning of the founding fathers of the “expatriates” who conquered the vast country which we now know as the United States of America. Then, as now, there were restraining hands, urging people not to go and exploit the opportunities which the new frontiers presented. Many of those who ventured forth became rich beyond their wildest dreams.

The early Pilgrims had landed and settled on the East Coast of America, without realizing that the vast agricultural and mineral deposits that were later to make America great were west of their own territory. Today, states like California, Texas, Ohio and Michigan provide the backbone of industrial output while the “Midwest” states account for the agricultural output. The sooner “Real Deltans” move to acquire landed properties in Asaba and its environs, the better for them. Years from now their kids will blame them for “missing the flight” – which is what the investment opportunities in Asaba will become in the future.

Today, in Nigeria’s Delta State, anyone seeking for investment opportunities

A visit to the site will reveal hills as tall as six storey buildings which must be removed for safety of aircraft and passengers

should ‘Go to Asaba”. If there is one airport in Nigeria which can produce the next batch of multi-millionaires, or more, it is that airport. It is already a winner even before being commissioned. And why is it? It is the ideal air gateway between Lagos and the Southeast and Southsouth – the zone accounting for close to 75% of Nigeria’s domestic trade. No other airport in the region or zone comes close.

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Already, domestic and foreign enterprises have indicated interest. One multinational company has acquired land; after paying exorbitant price for what was, until recently, “bush”. The other, a five star Nigerian hotel, wanting to become a chain, is also racing to obtain a strong foothold. The potential winners are on the move; the ultimate losers are still quibbling about irrelevant matters. But, in

order to assist all possible stakeholders to decide what to do about this airport, permit me to finish my fact finding report. Again, I challenge anyone who has contrary evidence to provide them for our readers to decide for themselves.

It was already confirmed that, contrary to widespread rummour, the total cost is estimated at under $30 billion for an international airport; when only a runway, at Abuja, was awarded for $69 billion.

More Facts About The Asaba International Airport With the conversion from a domestic airport capable of accommodating, at best, only Boeing 737 size crafts, to one which can handle any size of aircraft, the runway had to be lengthened. Today Asaba In ternational Airport, with 3.4 kilometres of runway is the second longest in Nigeria; the Murtala Mohammed Airport with 4.2 kilometres being the longest.

To make the extension, not only in length but in width possible more land had to be cleared to allow for the wider wing span of bigger crafts as

well. That required two operations First, called for the removal of 3.7 to 4 million cubic metres of earth, plants and rocks from one part of the airport to provide acceptable international visibility to landing aircrafts. The second called for using the same quantity of debris to fill a gully which would have created great erosion which would have threatened the airport and surrounding communities for miles around. A visit to the site will reveal hills as tall as six storey buildings which must be removed for safety of aircraft and passengers.

Unfortunately, photographs are not allowed at airports – for safety reasons. Otherwise, the point being made here would have been better made with one or two shots. So, there no ant-hills as some have claimed; only millions of cubic metres of earth to be moved around the same airport. For the sake of those who might not grasp the enormity of the task, 4 million cubic metres of earth spread one metre thick, will cover over 20 kilometres of road.

Three contractors, each with 50 dump trucks have been working on it for over four months; virtually 24 hours a day. And, they have not finished removing the enormous amount of stuff.

By YINKA KOLAWOLE

Vanguard, MONDAY, JUNE 18, 2012 — 37

Homes & Housing Finance BRIEF Abuja housing show to honour stakeholders

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•New buildings housing engineering and hospitality depts at Abia State Polytechnic

Surveyors fault FG’s position on social housing *Urge NASS to pass social housing bill Stories by YINKA KOLAWOLE

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state surveyors and valuers have faulted the position of the federal government on the concept of social housing, even as they appeal to the National Assembly to accelerate the passage of the Social Housing bill.

Minister of Land, Housing & Urban Development Ms Ama Pepple, said recently in Lagos, at the induction of 97 registered surveyors by the Estate Surveyors Registration Board of Nigeria (ESVARBON), that contrary to the opinion held by some people, social housing is not the delivery of free housing to the public.

Pepple who was represented by the Federal Controller of Lands, Housing & Urban Development in Lagos, Mr Onaeko Olayinka, argued that the place of government is to

provide an enabling environment for the private sector to excel. According to the minister, government is supporting social housing by ensuring that houses are produced in large numbers, cheaply and at the highest quality for the benefit of low income group. She said government hopes to achieve this by exploring options available in alternative materials that will deemphasise the use of cement.

“We are testing stabilised bricks from South Africa in our pilot scheme in Kuje, Abuja.Our building material testing laboratory in Yaba, Lagos is also coming up with options to cement based materials. This will not only lead to the crash of cement price but also drastically bring the price of houses down,” she stated.

President, Nigerian Institution of Estate Surveyors and Valuers, Mr. Emeka Eleh,

however disagreed with the government position. According to him, government owes it a duty to accommodate all citizens by providing for the poor and creating the right environment for those who could do so to build on their own, noting that the British government provides council flats for low income earners.

He recalled that the Federal Housing Authority (FHA) was set up to provide social housing, lamenting that it has since deviated by going commercial, making the houses they build unaffordable to the common man. He called on the government to come up with an agency that can deliver social housing in the true sense of it to take people from the street.

“We believe that if you are talking about housing for all in this country, there is no way it will not have social housing component.

FHA was established to provide social

Town planners seek enforcement of building code

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own Planners Registration Council of Nigeria (TPRCN) has called for enforcement of the building code to curb building collapse in the country.

National President, TPRCN, Mr KabirYari, said the building code was supposed to ensure that structures were constructed according to safety standards. He said that the existing building code was not being enforced and that there was no adequate sensitisation on the code. “A building code should not be left to government officials

alone, it must be a code for everybody in the city, particularly potential home owners, who should know it will protect their safety,” he said. Yari said that promoting the law without educating the ordinary man, who builds, would not make much impact, noting that the code contained minimum standards which the common man needed to observe. “We expect that an institution should be set up for the building code. This institution should sensitise the public so that in each state people will understand that

there is a minimum standard that must be adhered to,” he said.

He also identified improper town planning as another major challenge in the nation’s building industry as 66 per cent of the country’s population lived in unplanned places. He decried the absence of a master plan in major cities, urging government to hasten and revive such policies, noting that “the plans you see around are expired plans, which are supposed to be revised every five or 10 years.”

housing, it should be seen to be performing that function.

You cannot achieve an equitable society without providing for those who don’t have; those who lack the basic things they should have,” he said.

Eleh asserted that though the housing sector is better driven by the private sector, government has to facilitate equitable distribution of housing to ensure that everybody is properly housed, adding that an element of social housing has to be provided by government.

“What we should be talking about here is that every year, each local government should put 100 housing units into the market. If they had been doing this in the past 10 years, each would have put in 1,000 units.

These local governments are close to the people and therefore should know their needs more than the state or the Federal Government. They are better placed to allocate these houses to those who need them on a special basis.

We therefore encourage the development of social housing because it will ultimately lead to a more equitable society, one in which everybody has a home and nobody lives under the bridge,” he stated.

Also, Principal Partner, Akin Olawore & Co, Mr. Akin Olawore, noted that the concept of social housing worldwide is about government providing housing free to the disadvantaged members of the populace such as single mothers, orphans, elder citizens and the unemployed.

He said another way government can deliver social housing is by giving land free to developers and pegging the price it can be sold or rented to the public when completed.

otable personalities who have contributed to the development of housing sector in Nigeria will be honoured at the 6 th Abuja Housing Show/Award scheduled to hold between the 27thand 28thJune 2012 in the nation’s capital.

The programme is an annual platform for players in the real estate industry to showcase their housing projects, products and services and interact on major issues that can attract government attention to housing development.

The theme of this year’s edition is “Transforming Nigeria through the development of the Housing Sector”.

The housing award is also used to honour, recognise and encourage those who have contributed immensely to the development of housing sector in Nigeria. Notable among those to be honoured during the event are: Alhaji (Dr.) Ibrahim Gaidam, Yobe State Governor as the Housing Governor of the year; Ogbeni Rauf Aregbesola, Osun State Governor as the Urban Renewal Governor of the year; Mr. Terver Gemade, Housing Man of the year; Chief Bamidele Awosika, Chairman of Housing Corporation of the year; Hon. Ado Moses Okino, CEO of Housing Corporation of the year and; Mr. Bode Adediji, former NIESV President as President of Professional body of the year.

Others include Copen Services Limited and Sparklight Property Dev. Coy Ltd as Estate Developers of the year; Alhaji (Bldr) Bala Kaoje, PDP National Treasurer, Life Time Achievement in Housing; Copa Cabano Homes, Award of Excellence in Estate Development, among others.

The focus of this year’s conference, according Festus Adebayo, the Programme Coordinator, will be on Challenges of Building collapse; New achievement of FMBN; State Government Performance in Housing; FG Transformation Agenda and Housing Issues and; Social Housing.

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38 — Vanguard, MONDAY, JUNE 18, 2012

Homes & Housing Finance

By YINKA KOLAWOLE

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bia State government is set to sign a Memorandum of Understanding (MoU) with ASO Investment Development Company Ltd (AIDC) to develop 400 housing units that would form the second phase of the government’s housing estate in Umuahia new layout.

AIDC is a fully integrated property development that specializes in the procurement and development of property assets in Nigeria and management company and; a

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Abia partners property firm to develop 400 houses subsidiary of ASO Savings and Loans Plc. Mr. Nwabueze Onwuneme, Special Adviser on Housing to Governor Theodore Orji, said that as soon as the two parties sign the MoU, the company is expected to move to site immediately thereafter.

“We should start clearing the site in another week and it is expected that in nine months we will be seeing the first set of buildings,” he declared.

Onwuneme said that the land area for the development

is 50 hectares and that a modern community would be built on it. “We have 400 semi and fully detached two and three bedrooms houses that will be eco -friendly, fire station, mall, hospital, playground, recreation facility and parks. The roads will be wide and paved with interlocking stones. We are not developing slums,” he added.

The gubernatorial aide also declared that the Abia State government is prosecuting a grand urban renewal strategy to ease chaos in Aba as well

as in all major towns and in local government areas in the state. “The Aba-Owerri Road, the mid-rib of Aba city, no longer has its nagging traffic problems because of the relocation of the notorious Osisioma Motor Park to a new facility the Abia State Government built recently.

Areas where there were near immobile traffic now have free flow of traffic because of the relocation of the former motor park, which has been turned to a leisure park with beautiful flowers and welllandscaped lawn.

“Also, road medians have been erected to traffic control and a foot bridge has been constructed with a part dropping off at the compound of the Abia Polytechnic to ease students’ crossing of the main road. The foot bridge drops close to a new high-profile ‘Book House’ building, a huge three storey complex that the government built to house some departments in the school. Two other new buildings dot the school, a new engineering complex and a Hospitality Department,” he stated.

Vanguard, MONDAY, JUNE 18, 2012 — 39

Insurance In the first half also, we try to put up the retail end which is one that has been footdragging and we have been doing a lot of research and we have been trying to enhance the visibility of our organisation to concisely put the idea of insurance in the minds of the people on the import of taking one form of insurance policy or the other.

How do you explain it, a man sitting in his own house, did not go to the airport, did not go to Abuja, did not plan to enter an aircraft but he suffered loss as a result of an air crash. So it just goes to show that you cannot sit down and totally imagine where a disaster can happen from. We believe that we are a praying nation, and we will continue to pray, however, we should also make sure that we have the adequate insurance at least to take care of the financial stress even if you cannot handle the emotional aspect. And when the financial stress is taken care of it also reduces the emotional stress.

By ROSEMARY ONUOHA

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ollowing the avalench of claims that has beset the insurance sector in recent time, Managing Director of Crystalife Assurance Plc, Mrs. Oluseyi Ifaturoti is of the opinion that any organisation that wants to remain in business must do what is professionally ethical by charging appropriate rate for risks.

Highlights of first half of 2012

Mrs. Oluseyi Ifaturoti

Conversion to IFRS

‘Insurers must charge appropriate rates to remain in business’

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The first half of the year started a bit slow because of the way the economy started.

And you know that a lot of things in Nigeria are dependent on the budget being signed and it was not signed until after the first quarter of the year. So the entire year started on a very slow motion. But in the private sector activities were going on, everybody tried to renew their policies. But you know in all intent and purposes, the government contributes about 50 per cent of our business, so if the government is not spending, we feel it and if the government has not renewed their businesses, we feel it.

For us in Crystalife, a lot of the government businesses did not get renewed effectively and so it didn’t look too good. Hopefully before the half year is concluded, we believe that most of them will renew their policy. With all the claims occurring now, for instance the Dana air crash, a lot of victims belong to one government sector or the other. For some of them their policies have been renewed, for some their policies have not been renewed but lives have been lost. Ideally people should just ensure that their insurance policies are up and running because nobody knows when disaster will come or may happen.

Also, we had a lot of friendly interaction with our own regulator, the National Insurance Commission, NAICOM, on the issue of the International Financial Reporting Standard, IFRS, about the things that we need to do to ensure that we are complying inline with best practices. 2012 marks the beginning of accounting under IFRS. In 2011, we were supposed to give year end balances and convert to IFRS so every operator has been trying to work along that line.

We are doing so many things, we are trying to put together the ERM platform which is a requirement even without it being the requirement, every body is trying to work in line with best practices, because it sometime that we are all trying to ensure that we put on ground. A lot of other institutions are undergoing changes as there has been some consolidation, buy-overs in the industry, majority shareholding in some companies and some that are bank related have had new

In Crystalife, we are reviewing and that is it. A lot of risks come and we look at it and if the person is insisting that this is not it, we let it be

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shareholders coming on. It’s been okay all in all, every body has been up and doing.

One thing about our industry is that we are always up and doing because you can not afford not to comply, mobilize business or not to ensure that your premiums are collected because you need to have the premium to enable you pay your claims. And of course a lot of organisations are tiding up their year end, some have done their AGMs, some are in the process of doing it. So basically that has been it and by the end of the month we should be having the Nigerian Insurers Association, NIA, AGM where it is expected that we will usher in a new chairman for NIA. But yes, there have been heavy claims for us in the first half of the year. The claims have been huge and everybody has been complaining. That brings us back to what we need to do as operators because how much you charge is also a function of your experience.

When the 9/11 happened, insurers in so many parts of the world edged up their rates because when there is a huge disaster, the effect of that is that rates would be rationalized again and reviewed and it would go up for the insurance industry to be in a position to continue to pay claims. One thing that we have experienced in the Nigerian insurance sector is huge claims because a lot of us cover the police and they have been in the forefront of the Boko Haram attacks. Some even die and there was an accidental crash of a helicopter. Dana is another huge claim on this industry, there is property damage, loss of human lives and of course we have nothing less than 20 lives of those that are insured by virtue of them being part of one government organisation or the other. We don’t want to call it a gloomy picture but it has not been a fantastic first half of the year for us but we have been living up to the settlement of claims which is our core priority.

Conversion to the International Financial Reporting Standard, IFRS, may be expensive but it is good because it is tending towards best practice, towards good exposure, towards a lot of integrity and transparency. And it will grant comfort and confident to foreign investors or anybody. Any nation will be happy to have direct foreign investment here but one of the things that will stand in the way is interpretation of financial results when they are not sure. Because what IFRS does is to put every financial result on the same page anywhere you go in this world. This is a standard, if for any reason you are saying this is this, you will explain and give the reason why it is that. So it leaves nothing to imagination. And for us, yes it may be a bitter pill to swallow but it is good. The public will be confident, your shareholders, policyholders are comfortable because they can read and know that it is the truth and the issue of creative accounting is gone for good with that. Everything is brought to book and you have to give explanations for the whole load of things and those standards are there to ensure transparency and full disclosure of the issue as they are. So Nigeria has done well to fall in into the list. For us at CrystaLife, we have finished our conversion; we have started sending our report to NIACOM. Our first quarter report was sent in line with IFRS. So we are at home.

A regulator will not just come out with anything, they have seen that it is the best for the market and those of you that embrace it will enjoy. All of the things that we are enjoying in Crystalife today are because we have done things well. When they said raise capital, we raised real

capital and we are happy for it. When the capital market came and swallowed people up we still had things to fall back on and by the special grace of God, we are still running our business. We have written off some diminution because of the loss in the market but we are still over and above the minimum capital and we are better and stronger. Everything we say we are is what we are. We are comfortable and confident.

When a foundation is faulty issues will be there, when the claims come, there will be issues. But here when the claims come we pay. The only thing we need to do now, from experience is to review the rates that we are charging on some of the policies because the claims have been immense. If we do not review and charge according to the risk in Nigeria because everywhere has suddenly gone riskier, the life has suddenly gone riskier, property everything has suddenly become riskier so the rates we charge have got to be reviewed according to our experience on all of the risk that we are writing.

Appropriate pricing of risk With the incidence of claims that we are experiencing, any organisation now that wants to remain in business must do what is professionally ethical.

You must charge appropriately. We are underwriters, we are not meant to charge premium and go to be praying that claims will not happen. We should charge according to the risk that we are carrying. After assessing the risk, we should determine the appropriate premium commensurate with the risk that we are carrying.

Claims are real; you need to do something about it so that your bottom-line will remain active because the percentage of claims to what you write is a percentage of underwriting.

Your underwriting result at the end of the day is a function of how well you underwrite.

What is the job of a prudent underwriter? It is to evaluate a risk and to determine whether to take it or not. And if you will take it, at what price will you charge? And that price depends on the severity of that risk when it occurs and the possibility as well as the frequency in which it will occur, those are the things that the underwriter should take into consideration.

In Crystalife, we are reviewing and that is it. A lot of risks come and we look at it and if the person is insisting that this is not it, we let it be.

Some of them have come back to say, ok you can have it at your rate, some have gone but we are still here. We wouldn’t take things that will wipe us off the economic landscape of Nigeria or wipe us off the corporate landscape of Nigeria.

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40 — Vanguard, MONDAY, JUNE 18, 2012

Appointments & Promotions vicahiyoung@yahoo.com

Ajibola, 2nd Vice President

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JIBOLA, elected as 2ndVice President is an accomplished and astute bankers and had served as National Treasurer of the Institute, 2008 - 2010.

His journey into the financial sector commenced in 1989 when joined the services of Nigerian-American Merchant Bank Limited and rose to the position of a Senior Manager/Head in 1996.

Same year Ajibola moved over to First City Merchant Bank Limited (now First City Monument Bank Plc) as an Assistant General Manager where he held the post of an Assistant Vice President & Head of Credit until 1999.

Ajibola occupied other senior positions in the banking industry which included Deputy General Manager, First Bank of Nigeria Plc, 2002 – 2004; General Manager and Divisional Head, Intercontinental Bank Plc (now Access Bank Plc), 2004 – 2005; Executive Director and Regional Chief Executive, 2005 – 2009; Managing Director Designate, Intercontinental Bank Plc East African Franchise, 2009.

A first class graduate of Economic from Obafemi Awolowo University, Ajibola is an er udite scholar, intellectual and seasoned professional banker, economist and legal luminary, who qualified as Associate of the Chartered Institute of Bankers of Nigeria ACIB, in October 1997 and was subsequently conferred with the Fellowship status of the Institute in 2006.

He is also a Fellow of the Institute of Credit Administration of Nigeria, 2008.

At present Deacon Ajibola is a Management Advisor(/ Risk) Inland Revenue Service,2012 to date and prior to his appointment he was the Director of Operations, Lottery Trust Fund, The Presidency, Abuja, – 2012.

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Food, Beverage and Tobacco Senior Staff Association of Nigeria, FOBTOB, President, Comrade Tunde Abdulrahman with Managing Director Promasidor, Keith Richardsand Promasidor branch executive at the conferment of the Senior Comrade Award in Asaba, Delta State.

Aina emerges President as CIBN elects new leaders A SEASONED and well grounded professional Banker and a member of the Taskforce on Global Banking Education Standards Board, GBESB,Mr. Segun Aina, has been elected the 17 th President/Chairman of Council of the Chartered Institute of Bankers of Nigeria, CIBN. Elected alongside Mr. Aina to lead the institute for the next two years are are Mrs. ‘Debola Osibogun, st Vice President; Dr. Segun Ajibola, nVice President and Mr. Uche Olowu, National Treasurer.

Mr. Aina who succeeds immediate Past President, Mr. ’Laoye Jaiyeola.

Similarly, Mr. Adebiyi Oladele Alabi, ACIB, Executive Director, Ecobank Nigeria Plc; Mr. Bayo Olugbemi, Managing Director, First Registrar Ltd, Mr. Kenneth Onyewuchi Opara, FCIB, Deputy General Manager, Fidelity Bank Plc and Barr. Deji Olanrewaju, FCIB, Head of Department, International Law, Babcock University, were also elected into the Governing Council of the Institute.

Aina, until his election as the President/Chairman of Council, has served the Institute in various capacities including, 1stVice President 2010 – 2012; 2 nd Vice President 2004 -2006; Chairman, Board of Fellows, 2010 – 2012; Chairman, Board of Practice Licence; Chairman, Corporate and Public Affairs

Committee, 2004 -2008; Chairman, Strategic Planning Committee. On the global scene, he is a member of the Taskforce on Global Banking Education Standards Board (GBESB), 2011 – 2012, formed in Malaysia.

A product of Universities of Lagos and Ibadan, he holds a number of academic and professional qualifications among which are, Masters of Science in Banking and Finance; Bachelor of Science degree in Accounting.

He qualified as Associate of the Chartered Institute of Bankers of London, ACIB, in 1979 and also a Fellow of the Chartered Institute of Bankers, (FCIB), London and Nigeria; Fellow, Nigeria Institute of Management (FNIM), Fellow, Institute of Directors (FIOD); Member,

Canadian Council on Africa etc.

The President is also an alumnus of Lagos Business School; INSEAD, France and IMD, Switzerland.

A seasoned and well grounded professional Banker, Aina has contributed significantly to the growth and development of the banking industry.

He started his professional banking career at the United Bank for Africa Plc in 1974, moved to Ecobank Nigeria Plc as Assistant General Manager in 1989 and rose to the position of Executive Director of the bank in February, 1994. Aina left the services of Ecobank Plc in 1999 and joined Fountain Trust Bank Plc (now member of Spring Bank Plc) as the

Managing Director/Chief Executive until his voluntary retirement from the bank in 2004.

In addition, he has served as Director of many other institutions within the financial services industry such as: Nigeria Interbank Settlement Scheme PLC (NIBBS), First Securities Discount House Ltd, (FSDH) and FITC In addition to playing active roles in the banking industry, Mr. Aina also serves as Director, First Atlantic Bank Ltd, Ghana; Director, ACCION Microfinance Bank; Chairman, Advancement Board, Federal University of Technology, FUTA, Akure; Member, Advancement Board, Obafemi Awolowo University O.A.U Ile-Ife and Member, Advisory Board, Osun State University, UNIOSUN. He was the President, West African Bankers Association (Nigerian Chapter), 1999 – 2001 and Chairman, Banking Industry Public Enlightenment Committee (a Sub-Committee of Bankers Committee), 2005 – 2008.

Aina was conferred with a national honours award of Officer of the Order of the Federal Republic, O,by the Federal Government of Nigeria in recognition of his contributions to banking industry and economy.

Mr. Segun Aina

Osibogun, 1st Vice President SIBOGUN was also unanimously elected as 1stVice President of the Institute.

Prior to her election, she was the 2ndVice President from 2010 to 2012 and her exceptional organizational skills made her uniquely qualified for her new role.

She commenced her banking career in 1979 and held various management positions in several institutions culminating on her appointment as Managing Director/ Chief Executive, Sky Trustees, a position held till 2009.

An accomplished Amazon of the Nigerian banking industry and a seasoned technocrat, Otunba

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Osibogun

Osibogun, qualified as Associate of the Chartered Institute of Bankers of Nigeria (ACIB) in 1994 and was subsequently conferred with the Fellowship status of the Institute in 2005.

She is also an Associate of Chartered Institute of Taxation of Nigeria and had served the Country in various ways as Member, Presidential Committee on Housing and Urban Development; Member, Presidential Committee on Mortgage Finance; and Member, Real Estate Developers Association.

Vanguard, MONDAY, JUNE 18, 2012 — 41

Agric Business

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s the country awaits the introduction of higher duty on the importation of wheat flours and grain from next month of July as one of the measures to encourage the use of cassava flour in the country, there are indication that millers are fighting to maintain the status quo.

From next month , Wheat flour will attract a levy of 65 per cent to bring the effective duty to 100 per cent, while wheat grain will attract a 15 per cent levy to bring the effective duty to 20 per cent.

Recently, the rejection of the bill on cassava inclusion in bread by the National Assembly was traced to the fight back by the millers.

In fact the Minister of Agriculture, Dr. Akinwumi Adesina, while refuting the claims that a bill on 40 per cent cassava inclusion in bread production was sent to the National Assembly, said that the flour mills and their surrogates are doing all they can to misinform Nigerians so as to protect the super normal profits they siphon out of Nigeria.

The information that cassava consumption was bad for patients suffering from diabetes is one of the misguided information being passed around by the milers so as to truncate the government policy of including cassava in wheat flour.

The Minister said the statement is scientifically baseless and maintained that “cassava flour has low glycemic indices of 59.34 percent compared to wheat flour having 70.10 per cent.”

He continued: “The statement credited to some people that cassava consumption is not good for those with diabetes is wholesomely untrue, scientifically baseless and is a deliberate attempt to misinform Nigerians.

“In the Glycemic indices of selected Nigerian flour meal products in male type 2 diabetic subjects published in Diabetologia Croastica 36: 2, 2007, the authors compared cassava flour with yam, maize, and wheat flour among diabetic patients. The Glycemic indices show that yam flour is 49.81, cassava flour: 59.34, Maize flour 54.83 and wheat flour: 70.10.”

Quoting the President of the Nutrition Society of Nigeria, Prof. Ignatius Onimawo, he said: “cassava flour will not increase the glycemic index of bread. It will not aggravate diabetes.

In fact, it may lower it. The glycemic index of flour is higher than that of cassava.

It is only whole wheat bread (i.e wheat flour with bran intact) that has lower glycemic index.”

40% cassava inclusion in flour: Are the millers fighting back?

Former President Olusegun Obasanjo tasting the cassava bread

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BY JIMOH BABATUNDE with agency reports

The issue of use of cassava bread is also an economic decision. Nigeria spends N635 billion importing wheat and keeping farmers of wheat exporting countries employed, exporting jobs, while displacing jobs at home

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Some flour millers are said to be giving ridiculous excuse that the wheat flour being imported into the country had low protein content, and that mixing it with local cassava flour would rob the finished product of adequate protein content.

Some flour millers even stockpiled cassava flour to deceive Standard Organisation of Nigeria, SON and Nigerians that they were complying with government directive while they are not.

The minister said the nation had depended so much on wheat importation which, according to him, “costs the country N635 billion annually at the detriment of Nigerian farmers.”

He added “The issue of use of cassava bread is also an economic decision. Nigeria spends N635 billion importing wheat and keeping farmers of wheat exporting countries employed, exporting jobs, while displacing jobs at home.”

In 2011, estimates show that Africa spent more than $50 billion on food imports. The rising prices of food does not make the situation better in the years ahead, according to

Dr. Akin Adesina, Nigeria’s Agriculture Minister who is also an economist.

This probably informed why as the President of Nigeria between 1999 and 2007, Obasanjo promoted a 10 percent cassava inclusion policy in wheat bread in an effort to promote agricultural growth and diversify the economy through the Cassava Initiative project.

It was envisioned that Nigeria, being the largest producer of cassava in the world, could engage in a more effective utilisation of the crop through value addition with a view to promoting the agro-allied industrial sector.

Sometimes in 2005, Obasanjo’s government made it mandatory for bakers to include 10 per cent of cassava flour in the production of bread and all other flourbased products.

Unfortunately, his effort was frustrated by the millers who said it was not possible to include cassava in wheat flour.

Even out of office, President Obasanjo, now International Institute of Tropical Agriculture’s Ambassador, still believes in the policy as

he said recently that Africa needs to rethink its food import burden and consider ‘local content’ options, such as the inclusion of cassava flour in wheat to reduce the rising import bills.

“If we want to develop, we must change our consumption habits. We must consume what is our own, what is around us in Africa.

In this way, we will be able to make progress,” Obasanjo added.

The policy, backed by improved agricultural practices from IITA and national partners, increased cassava production in Nigeria by 10 million tons within 6 years, making Nigeria the world’s top producer of cassava.

Building on that success, researchers from IITA, working in a pilot bakery, have raised cassava content in bread to 40 percent without compromising quality.

Upon tasting the 40 percent cassava bread, Obasanjo exclaimed, “The taste is good!”

“We need to promote it to make people adopt and consume it,” he said. Besides relieving the burden on food imports, the adoption of cassava flour offers several benefits to Africa. It promises to make cassava competitive by creating markets for the root crop and offering fair prices to farmers.

With climate change taking a negative toll on most grains, cassava production is fast becoming an option. The crop’s tolerance of extreme weather such as drought and its ability to thrive on poor soils are increasing its

appeal.

In Nigeria, for instance, the government estimates that the 40 percent inclusion of cassava flour in wheat bread could help the country save about N254 billion ($1.7 billion) annually.

“But more than savings, this will also provide jobs for our youths,” said Adesina.

The success of the cassava policy in Nigeria aims to radiate benefits to larger aspects of the economy including helping in stabilizing the exchange rate of the naira to the dollar and more importantly, making the farmers proud and richer.

So, one major challenge, which advocates of cassava flour said they are facing is how to convince flour millers that Nigeria’s cassava flour is of good quality. Many of them expressed the fear that not many processing companies abound, and that the cassava flour may not be adequately processed to meet the desired quality.

But, Dr. Akinwumi said the private sector has expressed readiness to substitute cassava flour for wheat flour, citing UTC Plc and Food Concepts as few of the bread and confectionaries companies.

This was confirmed by the management of the United Trading Company (UTC) which said that it has set out plans to cooperate with flour manufacturers and leading corporate bakers to achieve the Federal Governments drive for the inclusion of 40 percent High Quality Cassava Flour (HQCF) in the production of bread.

Folusho Olaniyan, managing director of UTC said “We can confidently reveal that, we have the capabilities to partner with the Federal Government, particularly meeting the 40% inclusion.”

She noted that UTC is positioned to be part of the initiative is based on the company ’s first demonstration -test run of cassava-based bread, which dates back to 2007, saying that the company has actually gone ahead to match the quality of the bread produced from the High Quality Cassava Flour (HQCF) with that of 100% wheat flour.

She said they are going to start an enlightenment campaign as there are “ market interest group that are interested in the cassava project and we are going to enlighten people, we are going to hold meetings and discussions.

“What we are doing now is educating most of our customers of the benefit of the products and that of the project to the nation. And any patriotic Nigerian should buy into this project. Because ultimately, it is wealth, job creation for the country, as well as food security and it will give a boost to the profile of the nation. “ C M Y K

42 — Vanguard, MONDAY, JUNE 18, 2012

Aviation BRIEF

Stories By LAWANI MIKAIRU & DANIEL ETEGHE

Air crash reports: Kayode should substantiate doctoring claim

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resident of the National Association of Aircraft Pilots and Engineers (NAAPE), Comrade David Isaac Balami has implored Nigerian travelling public not to panic and stop to fly saying that the country would soon get over the DANA crash.

Speaking during a press conference at the Secretariat of the National Union of Air Transport Employees (NUATE), Comrade Balami stressed that Nigerians should feel free to fly adding that although it appreciate the fears and anxiety of the public at the moment, the industry would soon pick up again.

According to him, “I want Nigerians to feel free to fly, it is not easy, it is not going to be easy but we are going to get over it, the government is interested, NCAA, they have been trying but they are going to do more, we will all sit up, it is not good to criticize us because, I can tell you that whether we like it or not, not because of the plane crash, we aviators, most of us have failed Nigerian” “Most of us as airline operators have failed Nigerian, even in the way we treat passengers, somebody come to buy a ticket it is as if the airline is doing the passenger a favour, flight is been delayed, there is no communication, there are so many ways that the aviation sector has hurt Nigerian citizens but we want to assure them that because of our relationship with management of each airline

— Capt Akinkuotu

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From left Miss Benyl Ehondor, Customer /PR Manager, Tehila Integrated Services Ltd; Mr. Timothy Ogboruche, Chief Executive Officer and Mr. Pagag Mycoyett, Chief Engineer during a press conference in Lagos to announce the forthcoming Tehila/Master Audio Sound Summit 2012. Photo by Lamidi Bamidele.

DANA Crash: NAAPE implores Nigeria's travelling public not to panic and the government, I am talking about NAAPE as a body, we are going to do everything possible to make sure that Nigerians have confidence in the aviation sector once again and we are going to get there” he stressed.

Speaking on the purpose why the conference was organized, Comrade Balami said the purpose of the press conference was first of all to

commiserate with Nigerians, the families of those that lost their loved ones, and the entire nation and also to let the press know that for the very first time NAAPE membership went on strike in Air Nigeria for up to a week to make the aviation sector better.

Comrade Balami further said Air Nigeria airline was not grounded due to safety reasons, but due to welfare

package which ‘’ we believe that if we did not intervene or come into the whole issue, it could lead to incident or accident and we all know why there was a delay because the management of Air Nigeria did not agree with the association on the issues that were on ground and because of that, it took us a lot of time before the Chairman of Air Nigeria, Mr. Jimoh Ibrahim, addressed our members so the strike has been called off ”

Kenya Air to cut cost after profit drops K

enya Airways will cut costs this year to protect its bottom line, its chief executive, Titus Naikuni, said after a sharp rise in its fuel bill hit annual profits.

The airline, which is owned 26.73 percent by Air FranceKLM and 29.8 percent by the Kenyan government following this month’s rights issue, is ranked among the largest carriers in subSaharan Africa, alongside South African Airways and Ethiopian Airlines.

Mr Naikuni said the costcutting measures would be far-reaching and will affect procurement, staff productivity and fuel costs but would be preceded by a thorough review of the airline’s cost structures.

Naikuni also said the firm would also drive revenue growth through increasing its fleet to 40 planes this year from 34, while opening new routes to Beirut and Abuja.

The airline, whose strategy hinges on connecting Africa to the rest of the world through its Nairobi hub, will

also increase its fleet of freighters to three from one.

“You can’t let costs run away with you,” he told an investor briefing after the company reported a 57 percent drop in pre-tax profits in the year to end-March to KES2.15 billion Kenyan shillings (USD$25.2 million), after oil prices jumped during the period, sending its direct costs up by 44 percent to KES77 billion shillings (USD$902

million).Revenue increased by a quarter to KES107 billion shillings, buoyed by higher passenger and cargo traffic.

Kenya Airways’ said a move to bring together carriers under the African Airlines Association to buy fuel jointly in bulk, would save it USD$2 million this year, adding they would also carry on with fuel hedges in order to manage the costs.

Analysts said focusing on

costs was the right step, adding that next year ’s delivery of the first of nine 787 Dreamliner planes ordered from Boeing, would also cut costs as the planes are more fuel efficient. ‘ “This is a very volatile business because fuel costs are something that airlines cannot really control,” said Gregory Waweru, who covers Kenya Airways at Kestrel Capital.

Safety: Ibrahim advocates compulsory IATA,IOSA membership for domestic airlines

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he Chairman of Air Nigeria, Barrister Jimoh Ibrahim has advocated compulsory membership of International Air Transport Association(IATA) for domestic airlines in the country and their audit by the organization’s oversight safety audit(IOSA).

This, he noted would promote safety and restore passengers confidence in Nigeria registered schedule

passenger airlines.

In addition, he called on the Federal Government to ban from the country’s airspace, geriatric aircraft which he humorously nicknamed’’Grand Papa’’ planes.

He noted that the average age of aircraft in the fleet of his airline was between three and nine years and they are maintained as at when due to ensure safety,’’We are not in the group of airlines

operating Grand Papa fleet of aircraft’’.

He said with the membership of IATA/IOSA in conjunction with NCAA, the safe operations of airlines in the country would be better monitored including their finances by ensuring that they do not default in their financial obligations to other agencies and constant maintenance of the aircraft in their fleet.

ollowing the claim by Former Minister of Aviation, Chief Femi FaniKayode that the Federal Government was responsible for doctoring reports of past plane crashes in the country “in an attempt to manipulate the reports”, Rector of Ilorin College of Aviation, Kwara state, Captain. Fola Akinkuotu has said that Chief Kayode should substantiate his claim.

Captain Akinkuotu while disclosing this development to newsmen said, “I am not aware and I do not know and then I can’t say whether any document has been doctored and I do not expect that they should be doctored. I like to believe that people in the Accident Investigation Bureau (AIB) are good people and are professionals. However, if a former minister says so, what I will say is that the statement should not be made only, but should be substantiated” Asked if there was any time the report of an accident was doctored, Captain Akinkuotu said that he was not sure but affirmed that any statement that could not be substantiated by the claimant was only been subjective adding that in a matter of this magnitude everyone concern should be objective.

“I wouldn’t know and like I said I don’t expect it. I don’t want to pass judgement over what I do not know. Anything that can’t be substantiated becomes subjective and I think we should be very objective in this matter” he noted.

There are reports that the Federal Government, fails to make public the reports because, in some instances, the local versions contradicted the versions prepared by the National Transportation and Safety Board (NTSB) of the US, renowned for air crash investigations across the world. The situation thus puts the government in a quandary.

Vanguard, MONDAY, JUNE 18, 2012 — 43

Tax Platform Federal Ministries and Agencies relating to fiscal issues as would ensure harmonisation of the fiscal policy issues of government.

In this regard, no other Federal Ministry or Government agency shall have the right to commit government through the signing of agreements, writing of letters, or other communication regarding fiscal policy issues without the authority or consent of the Federal Ministry of Finance. * The FMF and the relevant Government agency, which will administer the tax, shall seek recommendations from the relevant stakeholders to ensure that enactments are regularly reviewed and substantially meet the principles of good taxation and the objectives of Nigeria’s tax system as stated in this document.

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Kabir M. Mashi, Ag. Chairman, FIRS

National Tax policy guidelines and rules (7) to speedily implement legislation, which is passed by the Legislature. The FEC shall also ensure a cordial relationship with the Judiciary and that the independence and integrity of the Judiciary is maintained at all times. There shall be cooperation amongst all the members of the FEC in relation to tax and fiscal matters especially with regard to information sharing. All Federal Ministries, Departments and Agencies are required to provide and share all information that would assist in the accurate assessment and collection of the relevant taxes. This would include amongst others: Having a revenue generation (as distinct from an expenditure) mindset. Strict implementation of tax laws including overt and explicit support through referrals of major cases to tax authorities (Federal and State) on a continuous basis and integration of tax “psyche” in the day to day business of government: Ensuring proper assessment, collection and prompt remittance of taxes to designated government accounts; Ensuring fiscal compliance of every person that they deal with; * Ensuring that every database maintained in government has a compulsory field for the inclusion of the unique taxpayer identification number for every company, enterprise, individual and other registered organisation

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tate Governors would be expected to ensure co-operation among State Boards of Internal Revenue, the Federal Inland Revenue Service, the Nigeria Customs Service and other revenue agencies for the development of the Nigerian tax system in areas such as information sharing, improved structure and efficiency in tax administration, elimination of multiple taxation and adoption of a nationwide Unique Taxpayer Identification Numbering (UTIN) system.

Federal Executive Council in general and the Federal Ministries of Finance, Education and Information in Particular The Federal Executive Council (FEC) is the highest Federal level decision making body in Nigeria and is responsible for decisions, which impact all levels of Government in Nigeria. In addition, the Minister of Finance who exercises oversight functions on tax and fiscal issues is a member of the FEC. In this regard, the FEC shall be responsible for approving all matters, which will ensure effective oversight of tax policy and administration.

The FEC would be expected to give necessary direction to other levels and tiers of Government in this respect as may be relevant. Tax and fiscal matters shall be treated with priority, given the important role they play in the economic and national development of the country.

The executive arm of Government is responsible for encouraging voluntary compliance by taxpayers. An effective mechanism for achieving high compliance is by leading by example as well as by making the most efficient use of the tax revenue collected by the Government.

Accordingly, all members of the FEC shall on an annual basis ensure that they fully disclose all sources of income and ensure the right taxes are computed culminating in the publication of their tax clearance certificate by the 30th of June annually. The FEC shall in addition ensure in all of its decisions and actions that tax revenue is judiciously allocated and utilised for the benefit of the entire citizenry. The FEC shall also ensure that on a monthly basis taxpayers are informed of the use to which tax monies are being applied.

In this wise, the FEC shall ensure that matters of taxation and revenue generation in general form an intrinsic part of the deliberations and decisions around the annual appropriation budget as well as in discussions at the Federal Executive Council meetings on at least a quarterly basis.

The FEC shall co-operate with the Legislature in initiating legislation on tax matters and shall provide the necessary approvals required

There shall be cooperation amongst all the members of the FEC in relation to tax and fiscal matters especially with regard to information sharing

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*Use of e-payment systems in all transactions inclusive of direct remittance to the accounts of the tax authorities;Use of technology and related systems in the way business is done - e.g. electronic cash registers, automated land registries, etc and linkage of databases and such systems maintained in government to that Federal and State tax authority databases * Ensuring tax is a major consideration in the evaluation process of individuals and organisations such that the lack of payment of taxes is seen as an affront on government and a crime. *Ensuring that all Tax Clearance Certificates and other tax documents used in government transactions are referred back to the relevant revenue authority for authentication. *Have primary responsibility for tax policy matters, including initiating proposals for amendments to tax laws by the National Assembly. *The FMF shall coordinate all requests from other

* The FMF shall partner with the State Ministries of Finance and other State and Local Government agencies to ensure the development of Nigeria’s tax system and a tax culture amongst Nigerian citizens. * The FMF shall in this role, work closely with the Federal inland Revenue Service, the Joint Tax Board and the Nigeria Customs Service (in the case of import and excise duties) who have secondary responsibilities to support the FMF on all tax policy issues affecting the country. * The FMF shall support the Federal Inland Revenue Service and the Nigeria Customs Service (in the case of duties) on all tax administration matters as would complement the efforts of those agencies. Such support shall cover amongst others: *Ensuring that taxpayers monies collected are effectively accounted for and judiciously utilised *Communicating to the tax payer the use to which tax payer monies are being put *Demonstrating in action

and words that the taxpayer is a priority of government and is well appreciated The Federal Ministry of Education (FME) Shall provide support to the Federal Ministry of Finance and the relevant tax and revenue authorities in developing a tax culture amongst Nigerians. The Ministry through its relevant organs shall be responsible for ensuring the inclusion of taxation in the curricula of Nigerian educational institutions from primary to tertiary institutions based on a cradle to grave concept.

The Federal Ministry of Information (FMI) Shall provide support to the Federal Ministry of Finance and the relevant tax and revenue authorities in carrying out public enlightenment campaigns on tax and revenue matters affecting the country. It shall support the process of providing accurate and timely information flow to Nigerians on all tax and revenue matters decided at the Federal Executive level. In this regard, it shall co-operate with the Federal Ministry of Finance and the relevant tax al)d revenue authorities to obtain the required information for dissemination to the public.

The SEC shall co-operate with the State Houses of Assembly in initiating legislation on tax and revenue matters, which are within the jurisdiction of the State Houses of Assembly and also provide the necessary approvals required to implement legislation, which is passed by the House of Assembly.

The SEC shall ensure a cordial relationship with the Judiciary and that the independence and integrity of the Judiciary is maintained at all times. There shall be cooperation amongst all the members of the SEC in relation to revenue matters.

State Executive Council in general and the Ministries of Finance, Education and Information in particular The State Executive Council (SEC) shall playa role similar to that of the Federal Executive Council as the highest decision making body at State level. In this regard, it shall be responsible for approving all matters pertaining to policy development as well as the implementation and enforcement of taxes at State and Local Government level.

It is also expected to give the necessary leadership and direction to Local Governments in respect of revenue generation matters. Tax and revenue matters shall be treated with priority, given the important role they play in the economic development of the States.

C M Y K

44 — Vanguard, MONDAY, JUNE 18, 2012

People in Business

BY EBELE ORAKPO

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iss Mayen Ekpo is the Managing Director/Chief Executive Officer of Black & Gold Events, an events and catering outfit based in Lagos. The graduate of Food Science and Technology from the University of Nigeria Nsukka (UNN), said her going into events business was a case of turning her hobby into a profession. In this chat with Financial Vanguard in Lagos recently, the exCarnival Calabar Queen says the youths of today are not as business-conscious as they are money-conscious. They want to have a lot of money but they don’t want to work for it.

Excerpts. fter her secondary school education at Queens College, Yaba, Lagos, Miss Mayen Ekpo gained admission into the University of Nigeria Nsukka where she read Food Science and Technology.

“I graduated in 2008 and in 2009, I became the Carnival Calabar Queen. I was in Calabar, Cross River State for a year.

Afterwards, I decided to launch my own business because I worked in an event planning company for a while and I realised I was talented in that area. I began as a professional compere and it was exciting and nice to moderate at events. I actually started while in school. Some people would come to me and say ‘please cook for this event and compere too’ or ‘do you have anybody that cooks?’ And I could cook very well. I could cook for a large crowd so I will cook for the event and eventually end up being the compere. It was a wonderful thing and I realised I was going to do it professionally. I had finished school while I was queen so there really wasn’t anything to do apart from my duties as queen.”

For her to excel in her new profession, Mayen decided to acquire more knowledge in order to hone her skills and she did not have to go far to do that.

•Mayen Ekpo.... we need to be service-oriented; we need to She said: “I decided I was going to train myself and started learn how to serve. taking online wedding planning courses while I was queen in Calabar. As soon as my queenship was over, I launched my business called Black & Gold Events.”

Asked how she came about the name, she said: “When I wanted to start events planning, I realised if I was going to be in Lagos, there are a thousand and one events planners in Lagos and I needed to create a niche for myself. So I decided I was needed a lot of money. Ask still keep putting money take the risk of starting with going to do something that is anybody anywhere and they into the business every a new person. That is one really going to appeal to the will tell you that events single day." thing I have learnt. Even if elite, people that want the management business is As with everything in the person they know has finest things in life, the capital-intensive. I do rentals, l i f e , t h e r e a r e u p s a n d not been doing them well, classiest events, luxurious so getting the things to rent downs and so it has not all they prefer to stay with the events, and I realised what out to people costs money. I been smooth for Black and one they know. They won’t better name than Black & do everything, from Gold Events. Said Ekpo: want to try out a new events Gold! Black connotes mystery, decoration, catering, drinks, "The number one challenge planner. You will hear them intrigue, sophistication. And ushers and models, lighting, a new events planner faces say something like: ‘All when you see gold, you see to sound and technical stuff. is getting clients because these new people sef.’ wealth, affluence, so I realised In fact, we plan, package and as the saying goes, ‘the “Another one is Black & Gold was a perfect execute events. Of course you devil you know is better advertising. Advertising name. Under Black & Gold, I know that all these things cost than the angel you do not your business in Nigeria is have a luxury division which huge amounts of money so I know.’ Nobody wants to a lot of money, talk about is targeted at supplying luxury and classy goods. We do luxury hampers, just name it. Anything from the classiest brands in fragrances, time pieces, jewellery, we do all of that. Recently, I got into a very unique brand of coffee called organogold. It’s not just coffee alone, tea, hot chocolate etc. It is gourmet, meaning that the classiest people of the world can have a taste of it as well as those that have health issues. So I infused that into my business and so far, it has been doing very well.”

Speaking on her initial capital, Mayen Ekpo said events planning business is capital-intensive, “in fact, till today, I have not stopped spending money on Black & Gold because it is something •All set for an event I started from scratch and I

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You have to be an excellent administrator to manage a business —Miss Mayen Ekpo

C M Y K

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One important thing that we, as Nigerians must know is that this country is in the hands of the youths and the earlier we become serviceoriented, the better for us

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newspapers, magazines, fliers, posters, radio, television, even the internet, you spend money.

Getting committed staff that know what they are doing; good concept designers, good event hall designers, decorators, etc, is another challenge. I found out that before you can manage a business, you have to be an excellent administrator.

First of all, you have to be your own secretary, personal assistant, marketing and public relations personnel. So emptying yourself into other people that will now run with your vision is extremely difficult. And the youths of today are not as business-conscious as they are money-conscious. They want to have a lot of money but they don’t want to work for it. All they want is come out of school, do their youth service in a big oil company so that they can be retained or when they are done with the youth service, they get into an oil company. And I ask them, who is going to teach? Who is going to take care of the children? Who is going to be the civil servant?

"These are questions we should ask ourselves.

"One important thing that we, as Nigerians must know is that this country is in the hands of the youths and the earlier we become serviceoriented, the better for us because if everybody keeps grabbing, a piece of this and grabbing a piece of that, the country will just fall down flat so we need to be service-oriented. We need to learn how to serve."

In the next five to ten years, Mayen Ekpo says her desire is for Black & Gold to have its own stateof-the-art event centre in Lagos and by the grace of God, spread to other places.

Vanguard, MONDAY, JUNE 18, 2012 — 45

ICT STORIES BY PRINCE OSUAGWU

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hief Executive Officer, Main One cable company, Ms Funke Opeke, at the weekend threw a daring challenge at the federal government to open up the broadband market and see what an explosion the country ’s ICT landscape would suddenly experience.

Opeke was speaking while reviewing the activities of her company in the last two years to ICT Journalist in Lagos.

Her challenge apparently came off her worry that the country was still not having the expected access after huge investments in submarine broadband cable projects.

This same circumstance seems to have pushed her into changing Main One’s original business decision of being solely a broadband whole sale company to now venturing into the retail market.

Although she painted a flowering picture of growth and penetration that her company has made in the last two years, the feeling that many others were just behind ,seemed to dim her joy because for her, getting the country to the top spot of global broadband market was far more a desire than individual business growth and profits.

She believed that for a Main one that has close to 200 corporate customers, invested well over $255 million and still investing, great joy would finally come when the

MainOne @2 challenges govt on open broadband market

Ms Funke Opeke market is open, to create opportunity for all players to get together and put the country firmly on the map.

“We are not interested in building a monopolistic empire. We want others to come on board to help us in

taking access to where it is supposed to be in the country” she said.

According to her, “the problem with broadband penetration in Nigeria is not about infrastructure. There is infrastructure but it is in proprietary, meaning that it is controlled by large telecom operators. That is exactly why it is still costly to go into the inlands. That is why a huge capacity is still in the shores and major cities. That is why the wholesale retail price differences are still prohibitive and relatively high.

“However, there is a way out — Broadband policy. We are seriously advocating for it because it would make infrastructure available for all to play, without thinking so much about competition, business and profit” she added.

Taking the media through her company’s two years of operations, Opeke claimed that Main One has proven itself as a serious business outfit and a clear leader in the wholesale broadband genre of Nigerian ICT business.

“We have proven ourselves in wholesale broadband services in Nigeria, Ghana and other African countries.

At the moment, our cable

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f there are two men who have shown great confidence in Central Bank Governor, Lamido Sanusi’s attempt at entrenching a cashless policy into Nigeria, they may probably be the President of Electronic Payment Providers Association of Nigeria, E-PPAN, Mr Mac Atasie and his counterpart at Interswitch limited, Mr Mitchell Elegbe.

The duo through their outfits have rolled out different initiatives to support the cashless policy project. While Atasie’s E-PPAN rolled out a summit tagged E- Elegbe Sanusi Atasie payment for Government Summit in Abuja, to help government implementers of the policy out of the intricacies, Elegbe’s Interswith has thrown its weight behind the event.

The card company said its involvement in the epic event was due to its knowledge that the summit would bring a turn around in the CBN has decided to use etarget for Nigeria to embrace in implementing the Federal implementation strategies of payment as a driver of a new the cashless economy. Government policy on the CBN newly introduced generation of e-services in However, the MDAs are electronic payment. The cashless economy in Nigeria. public sector in a bid to currently facing a lot of summit would serve to release It could be recalled that the entrench the cashless society uncertainties and challenges relevant government officials of the pressure which the new government through the and has set January 2013

Elegbe, Atasie confident in Sanusi’s cashless policy

*Interswitch backs CBN, E-PPAN’s Abuja summit

provides services between Nigeria and Ghana. We are looking forward to linking from Togo to Benin Republic.

We are carrying a lot of Nollywood content on our network. So far, most of the companies uploading Nollywood contents on the net are doing so via our services.

We are also working on landing in Portharcourt shores to push capacity into that region. However, we are taking our time to ensure that the leap would have business value”.

Meanwhile, Opeke also noted that MainOne was looking forward to delving into the retail market. “We have partnership with second tier operators (ISPs) to be able to do that” she said.

She also believes that competition is one of the very realities of business but however added that in her case, MainOne’s competitors are just delving into the service areas that the company ventured into even as a green company , succeeded and moved far ahead. “I think that we are far ahead and should be confident that competition is far behind.

policy seems to be putting on them. So, it is expected that the two day intensive forum would strategise on the best implementation methods of the cashless policy by the Ministries, Directorates and Agencies, MDAs of government to implement the new government cashless society.

The summit which holds in Shehu Musa Yar’Adua centre Abuja, July 10-11 2012, plans to feature series of workshops which would be facilitated by the Central Bank Officers, Commercial Bank Officers and the top relevant organizations in electronic payment. The summit would also provide avenue for all public officers to ask relevant questions which feedback, at the end of the day, will be used to shape the new policy further.

The workshops would foray into wide areas of importance in the implementation of the government’s cashless scheme, including What role will e-payments play in driving down the cost to serve citizens? How can epayments complement the country ’s vision 20:20:20 initiatives? How can senior officials build business cases for new e-payments programmes that best meet the needs of their MDAs’?

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C M Y K

46 — Vanguard, MONDAY, JUNE 18, 2012

Trade & Investment

Nigeria Free Trade Zones' law is backward, delays business boom – AFZA boss

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hris Ndibe, Executive Secretary of Africa Free Zones Association (AFZA), an international non-profit organization established in Cape Town, South Africa in October, 2004 with the secretariat of the Association in Nigeria in this interview with Favour Nnabugwu said the country can indeed attain a successful free trade zone far and above other countries in the continent that have success stories to tell about the free trade zones. He however said that it will be possible only if Nigeria government can revisit the free trade zone law and put other infrastructures in place to attract the much needed boom in that area and many more.

Excerpts What do we have to learn from the Asian tigers and other successful economies that have made the best of the concept?

When we talk about learning from Asia, I will first tell you that an economic environment by other government agencies is very complicated; whose responsibilities are therefore, there is no allied to the development of universal model to a problem.

Free zones, a single body is So it is with Free Zone imperative. By this, you have scheme. There are no unique Free Zone customs, rules for the management of immigration etc under one Free Trade Zones, and so I body as it is in Dubai. This will suggest that the regulations make for good training and and basic law have to be retraining of allied agency revised according to the officers, thereby reducing the economic environment. No frustration of training a two zones are the same but custom officer on Free Zone you have to manage according matter and after some months it to its development, he or she is transferred. Such economic and social officer must be with Free environment. Going back to Zone for not less than 10 your question, we can observe years. the basic things that are NEPZA can work with Small common to the success of and Medium Enterprises zones which is working for Development Agency of the Asians. The concept must Nigeria, SMEDAN, under a be considered as part of the special guideline to nurture national economic strategy, otherwise we may not achieve strong linkages with local industry. This is because zones initiative determines their destiny from the start with the policy framework; incentive packages and other provisions. That is why I said earlier that our basic laws have to be revisited to make incentive competitive and reduce the control on zone’s law.

Nigeria Export Processing Zones Authority, the Free Zones Authority in SMEs into being an export the country is being processing zone or factory. underfunded and therefore Kenya is effectively practicing poorly managed as to take us this incubation strategy, to the Promise Land where including other African the Asian tigers are. I doubt countries. Nigeria should if the Authorities can on their encourage private rather than own bring in a consultant from public development of zones. anywhere to work with them This will shore up our chances for a period and pay the of success.

A state consulting firm or consultant government can obtain a Free which points to a weak Zone licence and agree with administrative body of a private developer to government. develop and manage under a With the level of interference well structured agreement. on our zones, administration The law review should

•Chris Ndibe incorporate a PPP framework for zone development outlining rights, responsibilities, and obligations of all parties with respect to all aspects of zone development, financing, regulation and promotion.

As a matter of fact, if we do what we are supposed to do and the right attention given, our Free Zone will take us to where the Asian Tigers are, thereby contributing to the realization of Vision 20:2020.

How would you describe the Nigeria free trade zone law in its present state?

The Nigeria Free Trade Zone law in its present state can be described as archaic and it requires visitation and review. The Free Zone law is delaying the business community who are dynamic

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I doubt if the Authorities can on their own bring in a consultant from anywhere to work with them for a period and pay the consulting firm or consultant which points to a weak administrative body of government

C M Y K

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beings. We should be dynamic as well in the review of the Free Zone laws. What we are using was enacted in 1992 and 21 years later, you think it can still serve and attract the dynamic FDIs? We are shooting ourselves on the foot by leaving the law which still states that an investor can only sell 25 per cent in the country in the internet world.

The individual would have read and made up his mind without us knowing so as to tell him that he can actually

sell 100 per cent and a host of other trash that need to expunged and modern tenets infused into it. If you check, there is no single policy of government that can mop up joblessness from the streets of the country like Free Zone policy. You will agree with me that we are joking by not giving attention to FZ law. A factory I visited in Mombasa, Kenya recently had 2,700 employees. Calabar Free Trade Zone has the capacity of hosting about 100 of such factories. You extrapolate and tell me if we will not go importing workers into Calabar. We have 26 FZs approved by the federal government at different levels of development to date. While you are doing your extrapolation, remember withthe backward linkages for some factories in place, some famers can budget because of the amount of raw materials they supply.

What laws are required to promote the scheme in Africa?

You are asking of what laws that are required to promote the scheme in Africa. We need law of connectivity and accessibility within the continent which should be pioneered by African Union.

We need a law empowering an association or council that should be assisting in Free Zone policy framework and the concept of extraterritoriality. The concept of extra-territoriality states that FZ should be treated outside the domestic customs territory but should be eligible for national certificate of origin and participates in trade and market access agreement.

We also need a law on labour regime which will consist of ILO standards and collective

bargaining. Moreover, the transparency of foreign worker employment regime will discourage excessive dependence on foreign workers at the expense of local ones.

Many entrepreneurs in African continent are still not aware of Free Trade Zones in spite of its seeming success. What are the benefits to their businesses?

I quite agreed that many African entrepreneurs are still not aware of the enormous potentials of Free Trade Zones for reasons bothering on our level of promoting our zones in this continent. Many African countries, including Nigeria, that have established free zones are not giving it the publicity it required. In the feasibility report of zones development, promotion is always given priority but because of the cost involved, most countries are always not meeting up. Promotion which is made up of advertising, Public Relations and personal selling are expensive world over and normally classified under capital budget if you must make impact. But most African countries classify promotion under over head which waters down the consideration and allocation.

At the end of it, money is spent but the effect is not achieved because of the low level of the promotion executed in a year. I have been assisting some African Countries of recent in their plan for promotion that will give the desired effect but the problem is always fund. A project of International complexion requires good funding to go to CNN and other media.

Vanguard, MONDAY, JUNE 18, 2012 — 47

Media & Advertising STORIES BY PRINCEWILL EKWUJURU

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n businesses globally, every company has distinctive visual communication symbol that distinguishes it from others.

So, in brand strategy, the overall corporate identity of an organisation cannot be over-emphasized as a result of its strong appeal.

Since the strength, dependability and perception of a company rests on the public’s acceptance of its corporate identity, which reveals its visual communication artistry, then the more impressive a company’s corporate identity strategy is, more respect and brand visibility the organisation gets in the business world.

States, like companies have the responsibility to evolve a more pro-active stand on corporate imaging which lies on the State Managers to creating an attractive visual communication symbol.

Before now, those charged with the responsibility of State positioning were not appreciative of the role of visual appeals in their corporate imaging, and are not also paying good attention to the look of their state’s signs, these, Managers of the Kwara brand have capitalized on.

However, the launch of an investment logo at the first anniversary of the state’s incumbent Governor, Alhaji Ahmed Abdulfatai, (AKA Maigida), to commemorate the Democracy Day Celebration at the Metropolitan Square, Ilorin, typifies the investment potential of the State, in explaining the power of logo in the overall brand communication artistry of the state’s investment opportunities.

Like the Governor said, the exposure of the investment opportunity of the state was in line with the covenant he had with Kwarans, when he assumed office.

Among other things, he had promised his administration would initiate programmes that would economically empower the people and reposition the state for foreign investment.

According to him, the new logo, which he described as a global identity for indigenes of the state, defines who Kwarans are; their plurality, diversity and shared values.

His words, “This campaign and the new logo that comes with it are designed to promote our state as a top investment destination using our reputation for peace, our strengths in agriculture, commerce, solid mineral development, tourism and strategic infrastructure.

“We intend to strongly market our state as a haven for lucrative domestic and

Marketing Kwara through investment logo

Governor Ahmed Abdulfatah foreign direct investment. Let me state here this is not a mere political gimmick.

Rather, we are setting the foundations for the long-term prosperity of our great state and its people,” the governor said.

He added, “As you are all aware, the previous administration placed the state on a global stage through innovative programmes and policies.

Today, we make history by mid-wifing a new Kwara, one

which gives us all a greater sense of pride, ownership and participation.

“Today, we celebrate the things that make us unique as a people and strengthen our identity as a people. On this day, we commemorate the peace in our communities, our harmony in the midst of diversity, our growing strengths in agriculture and our age-long reputation for entrepreneurship,” he added.

Earlier, his Senior Special Assistant on Media, Dr. Muideen Akorede, had disclosed that the logo cleverly pointed out the cultural attributes and resources of the state.

According to him; “The logo practically explained where we belong and what we have. The green element and livestock stand for our commitment to agriculture, while there are other elements that explained our links with the north and the south.

Also speaking, the Special Adviser on Communications and Strategy to the governor, Alhaji Abdulraheem Adedoyin, said that the

governor should be commended for the rebranding initiative.

According to him, the executive governor did not only conceive the idea immediately he assumed office last year, but drove and participated actively in the rigorous process that produced the new logo.

He assured stakeholders of the government’s determination to live up to the expectation of the new campaign. “We are creating shared prosperity for all stakeholders by leveraging on our resourcefulness in the area of impacting economic growth, human capital development and youth empowerment and strategic infrastructure,” he said.

A youth leader, Mr. Adio Garuba, who volunteered to talk, admitted that the activation has been on for a week and that they all had the feeling that something new was around the corner.

“Aside what we are witnessing this morning or what we may still witness later in the afternoon at the venue of the democracy day anniversary ceremony, a lot have been going on in the last one week, especially on Kwara Radio and TV, which pointed to the fact that something new is in the offing,” he added.

Outdoor sanitisation will create new opportunities —- DG OYSAA

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ollowing in the foot step of Lagos State, Oyo State by law established its own signage agency to regulate the outdoor business in the state. Mr. Yinka Adepoju, newly appointed Director General of the agency in a chat with Princewill Ekwujuru, exposed his plans for the State. Read on.

Starting signage agency in Oyo State, what have been your experiences so far First, it is the governor’s intention to clean the streets. To achieve this, it will be a systematic and gradual process. The governor is not happy with the dirty environment. If it is possible to do it in one day, he will appreciate it. The kind of sanitization is not the kind we have in some other places. Oyo State Signage and Advertising Agency (OYSAA) has been established in Oyo State and backed by law.

Henceforth practicing outdoor advertisement in Oyo State without due registration is an offence. We are starting with sanitization of the roads but not a total removal of all billboards on the roads but the bad, the dilapidated and non conforming ones. In the couple of weeks the city will be transformed.

What has been the response of the advertising stakeholders?

When we went to the roads and started cleaning, some called to complain why their boards are being destroyed.

Immediately I corrected the

Mr. Yinka Adepoju

impression, that we are not destroying boards, but pulling out bad ones which constituted eyesore to the city. Some of them fell on the ground and others were broken. We have only covered only a portion of Ibadan much more the whole state. So far we have removed over 1000 bad billboards which are junks.

Have you already bought the equipments for this operation So far, we hire equipment.

We are just starting as we

have plans to acquire the equipment. The removal of the bad billboards is ongoing.

There is need to acquire those equipment so that we will continue to use them.

Are you likely to regulate and operate?

We are not consultants. The agency was established by law. We are to control the outdoor business. It is a replica of LASAA, but we are going to operate within our terms. Some of the boards may be upgraded but not immediately.

What is your opinion on establishment of states’ outdoor regulations It is expected that operators should key into what states define as standards. We are professionals. For instance, I know the A-Z of advertising.

Again, we have seen outdoor adverting practiced in other places. I was instrumental to LASAA. In Abuja, the then Minister of Works, Ogunlewe set up a similar body and I represented OAAN in the committee I was part of OGSAA. I should be able to do the same in my state. It is a good development for states to do their own. We want to make Oyo state a role model in outdoor business.

Do you have plans to give the operators Billboard prototypes That is why we are planning a stakeholder forum. At the meeting, most of the parties both small and big operators are expected to be present.

We want advertisers to advertise but we will spell the sizes to them in order to have uniformity in the state.

What is the revenue drive in the exercise First, the plan is to beautify the state, create the aesthetics and remove bad billboards.

C M Y K

48 — Vanguard, MONDAY, JUNE 18, 2012

0817 002 3569

A rebuffed helping hand from the diaspora

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he impact of the IMFinspired Structural A d j u s t m e n t Programme during the Babangida regime fundamentally destabilized our economy, and ultimately altered the mobility of some of our brightest intellects in favour of a migratory urge to more clement pastures abroad. From a trickle in the early 80s, it has become an unstoppable flood that now includes even fresh graduates from our ailing universities.

Some optimists would claim that Nigeria’s loss is the diaspora’s gain, but would assuage the sense of loss with the speculated benefits of alleged millions of dollars monthly remittances by Nigerians working abroad every month. It is of no consequence that the moneys sent back home can only be a tiny fraction of the total loss Nigeria suffers from the forced absence of these expatriate Nigerians from their home country.

It is not unusual for these our fellow countrymen to miss their fatherland and some of them are even eager to make whatever contribution that will remediate some of our challenges. Amongst such people are successful technocrats, bankers, engineers, computer gurus, surgeons and professors in some of the world’s best universities.

The government’s creation of an agency for the diaspora was an attempt to formally harness the intellects of this caliber of Nigerians to the service of their fatherland.

However, the impact of this agency is yet to be felt, and the unsolicited opinions of such endowed Nigerians in the diaspora are often discountenanced.

In the rest of this piece, we will relate the experience of Toyin Dawodu, one such Nigerian, who is the successful Managing Partner of Capital Investment Group in California. He is also the CEO of Capital Energy Resources, an outfit currently testing alternative and clean energy generation for

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The government’s creation of an agency for the diaspora was an attempt to formally harness the intellects of this caliber of Nigerians to the service of their fatherland

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Nigeria.

Dawodu posits in a paper titled “Stable Electricity still a decade away for Nigeria”, that “Given Nigeria’s history of underperformance and corruption, and its current lack of systems, the country would benefit from creating an environment that is more conducive to the implementation of distributive generation.”

Smart companies, Dawodu observes, “are embracing technologies that deliver power efficiently at fifty to sixty percent less than the cost of imported diesel. Rather than rely on diesel generators, Nigerians can generate electricity at a cheaper rate on smaller micro turbines that run on cleanburning LPG that is produced in abundance locally.

“Nigeria spends 15% of it annual budget on importing diesel and Nigerians own millions of generators that are fueled every single day using the wrong fuel, a fuel that indirectly exports jobs and subsidizes other countries.

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

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CONTRIBUTORS Princewill Ekwujuru Naomi Uzor Providence Obuh LAYOUT

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Distributive generation can save the country billions of dollars in wasted foreign exchange, diversify and grow the economy, and create millions of jobs. The solution is to embrace technology and utilize locally- produced fuel that is mobile and cheaper”.

Dawodu is a great advocate of the huge potentials for cooperation between the United States, where he resides, and Nigeria, particularly in the area of power provision. His 4th of July letter to President Obama “Re: Investing in Nigerian Power Supply” and President Obama’s direct reply is available on the web; in addition, he has also published a paper on “Why America Needs Nigeria”.

The following are excerpts from a couple of Dawodu’s mails to this column on the nature of the feedback or lack of feedback from e m i n e n t Nigerians in public offices.

Please read on.

“I sent a letter to Dr. Iweala on how Nigeria can raise N3– 4 trillion, and create over half a million jobs without borrowing a single kobo from the local banks or the IMF. I sent the letter twice; one before she left the US after she was first appointed to make sure it was delivered to her at the World Bank because I cannot rely on Nigeria’s postal system.

I got no response. I sent another one, after she b e c a m e minister, to her office in Nigeria. I did not get a response either.

“The new trade minister and the pow-

er minister like to parade, the $1.5 billion loan guaranty scheme approved by the U.S. Exim Bank for power generation as part of their handiwork. However, when I sat down with Prof Nnaji in 2010 before he became energy minister and told him that I can get the US government to support power projects in Nigeria, his response was, “why would the US do that.”

(See my efforts to that effect. h t t p : / amazingtoyin.blogspot.com/).

“Our people are not sincere and most of the time I wonder whether they are serving Nigeria or serving themselves.

“Yesterday, I saw a post on LinkedIn about business loans in U.A.E. for businesses; the rate is 2.5%.

You are right, few businesses can make money on 20% interest and 40% cost of generating electricity. Nigerians subscribe to the illusion

that unemployment is 18%. I have been to Nigerian three times in the last six months, and every morning I walked around Surulere, and I saw hundreds of able bodied men and women on their balcony, with chewing sticks between 8 & 9 am with no where to go.

My estimate is that Nigeria has 30-50% unemployment and another 20% under employment.

“When Nigerian banks declare huge profits, are the profits from loaning money to Nigerian businesses or just manipulation of foreign exchange?

“I still don’t understand how a CBN governor can retain his job when the interest rate on loans from Nigerian banks is about 27%.

“Nigerian banks spend 40% of their revenue on diesel to power their branches. Sanusi has been making noise for 2 years about cost of power generation for the banks, but when I sent him a mail on how we can help the banks reduce their power cost, I did not get a response. I am of the belief that what they say and what they do are two different things.

Save the naira

C M Y K