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Businessmen and traders ofmember states of the EconomicCommunity of West Africa

States worried by lack of sanctity ofcontract and respect for the protocol ofthe community are seeking legal optionto settle trade and related disputeamong members.

They are in agreement that anECOWAS Court of Justice is a potentialforum for the adjudication of traderelated regional instruments and areof the view that there is need for

COMMISSIONING — From left: Dr. (Mrs) Lami Amodu, Principal, Queens College, Head Girl, Miss Angel Tony-Atidie & Bukky Latunji, at the commissioning of a 500 KVA Generator donated to the college by Zenith Bank recently.

ECOWAS businessmen seekcourt on trade disputes

By OMOH GABRIEL advocacy towards the expansion ofthe jurisdiction of the ECOWAS Courtof Justice hitherto limited to humanrights to cover trade related issues aspart of economic rights.

At a two day public-private sectordialogue on Nigeria/ECOWAS tradelitigation group organized by theAssociation of Nigerian Traders incollaboration with the EU and GermanInternational Cooperation meeting, itwas agreed that stakeholders shouldadvocate the amendment of theECOWAS Treaty to allow forsuprantionality of the body as obtainedin the UEMOA system.

According to a communiqué issuedafter the meeting and signed by KenUKAOHA, Esq, Secretariat President,National Association of NigerianTraders, the body agreed thatsimilarly, advocacy should be gearedtowards persuading member states todomesticate ECOWAS instruments incountries where domesticationapplies.

Ukaoh said: “This Public-PrivateSector dialogue was organised byNANTS with support from theEuropean Union and the GermanInternational Cooperation (GIZ) underthe Strengthening Nigeria’s Trade

Support Institutions (SNTSi)Programme. The dialogue wasconvened to examine avenuestowards promoting redress fortraders and other business actors incases of violation of ECOWAS Treatyand Protocols relating to freedom ofmovement, rights of residence andestablishment within the region.“Specifically, the event focused onidentifying possible strategiestowards the expansion of thejurisdiction of the ECOWAS Court ofJustice to cover issues relating toinfraction of regional instrumentsregarding trade and other forms ofbusiness activities, especially thepossibility of using strategic litigationin this regard. The event also exploredstrategies towards advocating forpolitical action on the part of memberStates with a view to amending theProtocol setting up the ECOWASCourt of Justice.

"Participants were drawn fromvarious stakeholder groups cuttingacross the relevant MDAs, regionalinstitutions, private sector, crossborder traders, legal profession, lawstudents, media, etc.

"The two-day event hadpresentations from various expertswhich focused on the practicalexperiences and issues that call forlitigation along the ECOWAS borderroutes, the possible legal avenues forcross border business operators toobtain legal redress in cases ofinfraction of regional instruments andthe limitations of these avenues,proposals for addressing thechallenges, etc. Presentations werefollowed by lively debates amongparticipants which brought to thefore, some experiences andfrustrations from the field, intricaciesof the jurisdiction of the ECOWASCourt of Justice, legal postulations on

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Continued from page 21

Daring

A successful business man has a mindset that is willing totake risks and tread on places people would not

ordinarily want to tread. He would not chicken out at the slightestthreat, so if you intend to start and own your business, youmust have a die-hard mentality, otherwise you would quit beforeyou even get started. It is also very important to consider therisks involved and your ability to handle them properly, sinceevery business involves risks. Most business people are verycomfortable with modest risk but quite uncomfortable with bigrisks. Although they are unwilling to gamble on long shots,they are more willing to take chances if their individual skillscan affect the probability of success. Then will they have thecourage to step out into the unknown and pursue their personaldreams.

Goal getterA successful business man has the mindset of not just setting

goals but also achieving the desired result. He does not settlefor less but always has his eyes on the prize. To him there areno impossibilities and failure is just part of the game. He doesnot believe in half measures but believes that he can go all theway and this mentality inspires a lot of confidence in clientsand customers and will keep them coming. A high level ofenergy also keeps the businessman trudging through roadblocks because he has his eyes fixed on long term goals. It isimportant you are very energetic and vibrant as it will ensurethat your business is up and running. You need to have amotivation from within and from those around you. The manwho invented electricity, tried ninety-nine times and failed; hegot it right the 100th time! I dare say, that is the spirit you mustpossess, no matter how many times you fail, you keep trying itout until you get it right….bottom line you must delete theword IMPOSSIBLE from your dictionary. Period!

It’s very important you move with the right people and readbooks and materials that will prepare your mind and repositionyour mindset towards positivity, because “if you can think itthen you can be it”. Never forget “you are a product of yourthoughts.” This reminds me of a Nigerian drama series thataired on the Nigerian national television network (NTA) in theearly 90s, BASSEY& COMPANY. The lead act was fond of saying“if you want to be a millionaire, think like a millionaire”! Asfunny as it sounded then, it is still very true and applies tobusiness. So permit me to say if you want to be a successfulbusiness man, then think like one!

If you are going to run a business of your own, you shouldfind something that makes you really happy. This should be atthe core of why you are even looking at going into business ofyour own, because if you try and make something work andyou have no passion for it, it probably won’t work out. If youhave passion for the industry that you are working in, you willhave a good chance of making it work out. What make a businessgreat are the people that run it and the passion that they havefor it. Keep this in mind when you are thinking of starting abusiness of your own.

From experience, many just jump into business because theyare excited about an idea and haven’t really thought about the‘whys and wherefores’. Taking a moment to reflect on yourmotivations and defining your purpose will be time well spent.

A lot of people go into business for the sole reason of makingmoney; this is not a good idea. It’s not a good idea because themain ingredient for success is missing. The main ingredientfor success is passion, and it’s virtually impossible to maintainhigh-levels of energy when you’re doing something you don’tlove. There will always be challenges in owning a business. Your love and passion is what takes you through thosechallenges. Without that passion, you probably won’t makeit.

The Basic Guide toStarting Your Business (4)

the applicability/enforceabilityof ECOWAS legal instrumentsin the Nigerian courts, etc.”

At the end of the two-dayevent, participants arrived atsome conclusions andresolved as follows:

“That the free movement ofpersons, goods, services andcapital within the region isfundamental to the realisationof collective prosperity withinthe region, therefore, nationalgovernments must take allnecessary actions towardscomplying with the regionalinstruments aimed atachieving a common economicspace within the region. Thatthe current lack of enforcementof regional instruments by themember States occasionuntold hardship for thecommunity citizens whoderive their livelihood fromcross border businessactivities, hence the need foralternative strategies ofenforcement.”

The communiqué said:“Since the domestic courts ofmember states areincompetent to adjudicate oncontraventions of regionalinstruments, there is need tohave an effective regionalplatform for the adjudicationof those infractions/infringements.” It further said“that Non-State Actorsshould explore the option ofStrategic Litigation bybringing cases before theECOWAS Court of Justice thatseek to test the extent of thehuman rights jurisdiction ofthe Court, especially sincesome of the trade relatedinfractions have humanrights undertone”.

Nigeria, the traders' body

MEETING - From left: Thiery Mbimi, Head Financial Risk Management, KPMG; OlumideOlayinka, Partner and Head, Risk Consulting; Tokunbo Martins, Director, Banking Supervi-sion, Central bank of Nigeria and Kabir Okunlola, Partmer. Financial Services Practice, KPMGat the KPMG breakfast meeting on Implementing IFRS 9 in Nigeria held in Lagos.

ECOWAS businessmen seekCourt on trade disputes

said, “needs to play a moreproactive role in shaping theregional integration agendaespecially by complying withregional instruments andusing its political andeconomic weight to ensurethat other countries do thesame.

Stakeholders, they argued“should liaise with and seekcollaboration of publicinterest lawyers to initiatecases at the ECOWAS Court ofJustice on possible pro bonobasis and that they shouldalso explore advocacytowards the establishment ofspecialised courts with tradelaw competence to adjudicateover trade related issues(such as customs valuation,certification, etc) at thenational levels.

That there is need to widenthe conversation to includeall those working on the ruleof law and regionalintegration, as well asmembers of the judiciary andpolitical leaders at thenational and regional levels.That the identified gaps intrade litigation should bebrought to the notice of therelevant Community

Institutions and memberStates as a way of advocatingfor the necessary legalchanges. They also said that“business actors and lawenforcement agencies whoply their trade across theborders should becontinuously sensitisedthrough workshops,seminars, publications androad shows about ECOWAS aswell as the rules andprocedures for transactingbusiness within the region,including products that arecontraband”. More over theysaid “there is need to establisha mechanism to collatecomplaints from the businesscommunity on theinfractions of regionalinstruments as it concernsthem. This could be donethrough the various markettraders associations. AlsoNigerian traders in othercountries should form orregister with NationalAssociation of NigerianTraders in those countries asa platform for obtaininginformation and seekingredress where the need arises.

They said: “Governmentshould develop a consciouspolicy towards integratinginternational trade law intothe curriculum of NigerianUniversities as a way ofdeveloping more domesticcapacity in trade law, whilealso recognizing the role oftrade lawyers in governmentinstitutions”. On the CET, theysaid that “the nationalauthority responsible(Federal Ministry of Finance)should enact the CET into anational tariff regulation toallow for smoothimplementation as this maycontribute to reducingdebates and entanglementsassociated with theratification or otherwise ofthe CET”.

The current lack ofenforcement ofregionalinstruments by themember Statesoccasion untoldhardship for thecommunity citizenswho derive theirlivelihood fromcross borderbusiness activities

Vanguard, MONDAY, NOVEMBER 30, 2015 — 23

Last week I talked about the technological opportunity the so-calledillegal refineries is offering the nation that is being thrown away. Therewere many Nigerians who felt the same way. But one particular reader

suggested a part 2 that should focus on the danger the destruction of tons ofillegally refined products is having on the coastal, as well as the entire Niger-Delta region. Federal government law enforcement agents have engaged in anendless battle with crude oil thieves. The joint military task force set up by

Is there nothing good about the so calledillegal refineries? (2)

government in this regard isto arrest and prosecute thesethieves. I am not so sure thatconsidering the impact oil spillhas on the environment, thetask force was empowered todestroy crude oil and productsrecovered from these so-calledillegal refiners. But regularreports have it that suchrecovered products are usuallydestroyed.

The most recent report by theCentral Naval Command saidits operatives have destroyedeight illegal refineries andabout 300 metric tons ofproducts suspected to beAutomated

Gas Oil and Crude Oil atAkassa in Brass LocalGovernment Area of BayelsaState. The spokesman of thecommand, LieutenantCommander E.D Yeibo said theraid was led by theCommanding Officer, ForwardOperating Base (FOB)FORMOSO, Captain MusaKatagum followingintelligence report on theactivities of suspected oilthieves in the area. The team,he said, was made up ofpersonnel from Naval BaseBrass and soldiers attached toNigerian Agip Oil Company.Yeibo said: “A total of eightrefineries and about 300 metrictons of products suspected tobe Automated Gas Oil andCrude Oil were destroyedduring the raid. “Thedestruction was in accordancewith extant regulations ofdestroying in-situ when arrestwas not effected.

The question being asked is:how were these productsdestroyed? Were they buried?Where they burnt? Threehundred metric tons of oilspilled in a region willpermanently deface thesurface on which it is poured.If burnt, it will send a lot ofcarbonmonoxide into the

atmosphere. Vegetation, fishand other aquatic lives in thatarea are thus destroyed. Thisinflicts permanent damage tothe means of livelihood ofthose living in that area.

It is doubtful if the Nigerianmilitary task force is aware ofthe global campaign on climatechange.

It is equally doubtful if theFederal Government ofNigeria is really concernedabout the environment andready to go along with theglobal trend. Global warmingresulting from emission ofcarbon into the atmosphere hascaused climate change that theentire world is worried that ifnothing is done to change thesituation, lives on planet earthwill be seriously endangered.

Nigeria today isexperiencing unusual rainfalland uncontrollable flooding.Flooding has sacked manyvillages and towns in variousparts of the country, yet the

military boasts of opendestruction of tons of illegallyrefined products.

It is important to draw theattention of the military to theongoing preparation forclimate change meetingstarting today in Paris.

Preparatory to the UNClimate Change Conferencein Paris between Nov. 30 andDec. 11, 2015, UN Secretary-General, Ban Ki-moon hasreiterated the need for anurgent global response toclimate change. He said: “Whydo I care so much about thisissue? First, like anygrandfather, I want mygrandchildren to enjoy thebeauty and bounty of a healthyplanet. And, like any humanbeing, it grieves me to see thatfloods, droughts and fires aregetting worse, that islandnations will disappear, anduncounted species willbecome extinct. Second, as thehead of the United Nations, I

have prioritised climatechange because no countrycan meet this challenge alone.Climate change carries nopassport; emissions releasedanywhere contribute to theproblem everywhere.

“It is a threat to lives andlivelihoods everywhere.Economic stability and thesecurity of nations are underthreat. Only through the UNcan we respond collectively tothis quintessentially globalissue.

“The negotiation process hasbeen slow and cumbersome.But we are seeing results. Inresponse to the UN’s call, morethan 166 countries, whichcollectively account for morethan 90 per cent of emissions,have now submitted nationalclimate plans with targets.

“If successfully implemented,these national plans bend theemissions curve down to aprojected global temperaturerise of approximately three

degrees Celsius by the end ofthe century.” Is the Nigerianmilitary authority aware of thedisaster caused byuncontrolled fire and carbonemission on the environmentand the lives of Nigerians? Arethese gallant armed men awarethat climate change is a threatto lives and livelihoodseverywhere in Nigeria andbeyond? Are they not grievedto see that floods, droughtsand fires are getting worsewithin Nigeria? Even if theyare not affected directly byflood, are they not concernedthat their fellow countrymenare internally displaced as aresult of floods? Are these mennot aware that some coastaltowns in the country will besubmerged one day and lots oflives and property will be lostas a result of global warming?

This administration pridesitself as a government whoseeconomic policy is to elevateNigerians and alleviatepoverty. Nigeria has the habitof missing out on greatopportunities. Nations areworking hard with others toreduce green house gasemission, Nigeria is hereannouncing to the world howmany illegal refineries itsmilitary has destroyed and thevolume of crude oil as well asrefined products its hasdestroyed through no othermeans than setting them ablaze.

They are not asking what theenvironmental implications ofsetting such amount of productson fire are. Nigerian leadersneed to put on a thinking capand think out of the box to savethe nation the pains of flooding,drought, desert encroachmentand fire disasters.

Business & EconomyWhy Nigeria ranks poorly in ease of paying taxes

Nigeria’s high cost of taxcompliance has been

identified as one of the reasonsfor its poor ranking in ease ofpaying taxes when comparedto other economies aroundthe world.Recall that Nigeria ranked 181out of 189 economiescovered by the ‘2016 PayingTaxes Survey’ conducted byPricewaterhouseCoopers andthe World Bank Group.This was a decline from its179th ranking in 2014.According to the report,

By JONAH NWOKPOKU

electronic tax filing andpayments were the mostcommon tax reformsundertaken by countriesworldwide during the pastyear. As a result, paying taxesbecame easier for mediumsized companies globally, andthe focus has moved fromreducing tax rates forcompanies to embracingtechnology and relieving theircompliance burden. Thereport also shows that lowincome economies continueto face the biggest reform

challenges.The report said: “Paying taxes2016 finds that on average,the model company has aTotal Tax Rate of 40.8 percent of commercial profits,down by just 0.1 percentagepoint from last year. It makes25.6 tax payments per yearand takes 261 hours tocomply with its taxrequirements, a drop or twohours compared to last year.”It said: “Nigeria ranks 181 outof 189 economies covered bythe survey. By contrast, theTotal Tax Rate for the model

company in Nigeria is 33.3per cent up by 0.9 percentagepoint from last year’s 32.4 percent. It makes 59 taxpayments per year and takes908 hours to comply with itstax requirements.”Speaking on the report at aforum organised by PwC forstakeholders and taxadministrators in Lagosrecently, West Africa MarketTax Leader, PwC, TaiwoOyedele said: “The tax burdenin terms of cost of compliancein Nigeria is very high. Insome cases, the cost in terms

of time and money is morethan the tax payable. Nigeriais not doing well by ranking181 out of 189. This means wehave a long way to goespecially because our tax toGDP ratio is very low at about8 per cent. Worldwide andlooking at countries in Africa,we are looking at 25 per cent.So, if we are looking at say,moving from 8 to 25 per cent,that is 300 per cent increase,we should not make theprocess of paying taxes verycomplicated.

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NBC’s graduatetrainee schemeproduces 4,500engineers

By PRINCE OKAFOR

Nigerian BottlingCompany (NBC)

Limited has so far producedover 4,500 competentengineers under its graduatetrainee scheme, and thusstimulating economic growth,youth development andempowerment

This was disclosed by thecompany’s Managing Director,Ben Langat on the occasion ofgraduation ceremony for 39trainee graduates from itsTechnical Training Centre inIkeja, Lagos. Langat statedthat the objective of theTechnical Training Centre is toconsistently provide a pool ofresourceful competentengineers and technicians whoare in tune with the highlydemanding technology andoperating environment in thebeverage industry.

He added that graduates fromthe Technical Training Centrehave remarkably demonstratedhigh technical and leadershipcompetencies over the yearsand have been rewarded withaccelerated career progression.

Also speaking at the event,Acting Head, Public Affairsand Communications, NBCLimited, Sade Morgan said,“The Technical Training Centreis one of the key pillars ofNBC’s commitment tostimulate human performance,improve productivity andinduce value-addedproduction capacity.”

She added that the place oftechnicians is very vital insecuring the already existingstandard heritage of ourorganization, as well assafeguarding and upholdingour world class manufacturingmodels and processes.

NBC Technical TrainingCentre was established in 1996to continually train andempower technical personnelin the company.

However, the Training Centreis open to young Nigeriansfrom other institutions with anaspiration to build a soundcareer in the beverage bottlingindustry. Till date, theTechnical Training Centre hasconcluded distinctive technicalprograms for over 4,500participants, staying committedto producing competent andenterprising engineers, as wellas equipping technicians withthe required skills necessaryfor the operating andtechnological requirements ina challenging industryenvironment.

Acorn Petroleum Plc is setto raise N5 billion

through private placementfollowing an approval of thebasis of allotment of its RightsIssue by the Securities andExchange Commission, SEC.The company has during itslast AGM obtained approvalfrom its shareholders to raiseadditional equity by way ofRights to existingshareholders and placementwith new investors.

In a statement, the companysaid that capital raisingexercise represents a

Recapitalisation: Acorn to raiseN5bn via private placement

By PROVIDENCE OBUH significant milestone in its re-capitalization process and

that it has commenced thesecond phase of the capitalraising exercise which will bea combination of Special/Private Placement to selectedinvestors during which thecompany hopes to raiseadditional N5billion in newequity. The company hintedthat approval was obtained atits last AGM fromshareholders to raiseadditional equity by way ofRights to existing shareholdersand placement with newinvestors.

Accordingly, the companysaid, “we will focus on the coredownstream activities of

distribution of petroleumproducts hence capital raisedwill be deployed towardscorporate restructuring,working capital andinvestment in criticalinfrastructures likeconstruction of storage depotsat Lagos, Port Harcourt andAbuja airports, constructionof a lubricants blendingplant, expansion of its retailoutlets chain, LPG Plants andthe development of an ultra-modern oil terminal.”

As part of its strategic plansto give liquidity and exitoptions to shareholders, thecompany has commenced theprocess of listing its existingshares with NASD via listingby introduction and this isexpected to be concluded inDecember 2015.

Meanwhile, the companyalso debunked rumors aboutthe reported sale of its assetsby AMCON, “we do not haveany assets encumbered byAMCON. During 2013, weentered into an agreementwith AMCON wherein one ofour assets was sold toAMCON in full and finalpayment of indebtedness.“This asset was in turn leasedback to the company for aperiod of time with an optionto buy back if the companydesires. So it is erroneous toreport that the company assetwas put up for sale when inactual fact the asset inquestion does not belong tothe company and not carriedin its books. The company isnot in dispute with AMCONand the company has theright of first refusal to buyback the facility which thecompany may decide toexercise if it so desires,” thecompany said.

The Chairman, SokotoState Chapter of the

Association of Bureau DeChange Operators, AlhajiAliyu Yar-abba, hascommended the Central Bankof Nigeria (CBN) for reducingthe banks’ lending rates from13 to 11 per cent.

he said: “This singular,highly commendable actwould certainly boostliquidity in Nigeria’seconomy, boost domesticcommerce and trade."

Yar-Abba told newsmen inSokoto last week that thegesture by the apex bank wascapable of enabling localmanufacturers to bolstertheir activities across thenation.

According to him, "Thedomestic manufacturerswould now be able to drawmore facilities from thebanks, resuscitate ailing and

Liquidity: BDC chairman lauds CBN for cuts in lending rate

collapsed industries andestablish new ones. They willalso be able to get more fundsat reduced interest rates toestablish new factories,aswell as small-scaleenterprises across thecountry.

"Consequently, the nation’shard-earned foreign reserveswould be saved; create moreemployment locally and curbpoverty and its attendantnegative consequences."

The Bureau De ChangeOperators further praised theCBN for directives to BDCoperators across the countryto collate the details of allthose seeking to buy the U.S.Dollars. Yar-Abba explainedthat the measure had helpedto drastically reduce theincidences of moneylaundering.

He said: "It has also reducedthe nefarious acts by some

Nigerians using AutomatedTeller Machines ( ATMs)abroad to launder money, aswell as engage in illicittransactions in foreigncurrencies. I am, however,appealing to the apex bank torelax the requirements that allBDC operators were directedto receive from theirprospective customers. Theseinclude photocopies ofinternational passports withvalid visas, Bank VerificationNumber( BVN) and airtickets."

He appealed to the CBN toincrease the ceiling on theamount of dollars the BDCswere allowed to sell to a singlecustomer from $5,000 to$10,000.

Similarly, he called for therelaxation of therequirements for purchasingforeign currencies forcustomers seeking below

$10,000, urging the FederalGovernment to initiatepolicies to force Nigeriansand other nationals andmultinational corporationsto transact their businessesonly in the Naira as "This isalso capable of boosting thestrength of the Nigerian legaltender, facilitate trade andinvestments. I am alsocalling on all Nigerians topatronise more Made-In-Nigeria goods, to encouragemore local production ofgoods.

"In the same vein, I amappealing to the FederalGovernment to sustain thecurrent commendablereforms of the power sector.This would also help in therevamping of the collapsedindustries, as well asfacilitate the springing up ofnew ones across Nigeria,’’Yar-Abba, explained.

VISIT: From left, Acting Head, Public Affairs & Communication, Nigerian Bottling Company (NBC)Limited, Mrs. Sade Morgan; Director, NBC, Alhaji Ahmed Mantey; Managing Director, NBC, Ben Langqat;Director, NBC, Laolu Akinkugbe and Executive Governor of Kwara State, Dr Abdulfatah Ahmed during acourtesy visit to the Kwara State Government House by the NBC delegation.

As part of itsstrategic plans togive liquidity andexit options toshareholders, thecompany hascommenced theprocess of listingits existing shareswith NASD

Vanguard, MONDAY, NOVEMBER 30, 2015 — 25

Continues on page 26

Corporate Report

Flour Mills Nigeria showed anexceptional rise in profit at

the end of its second quarter tradingyet it is facing operating pressurethat leaves it just one step away froma loss. The company’s 450% rise inafter tax profit in the second quarteris an exceptional earnings record ina year of a general corporateearnings lull. With an after tax profitof N24.02 billion at half year, thecompany has already made aboutthree times the full year profit figureit posted at the end of the precedingfinancial year.

The company’s impressive profitshow however came almostexclusively from profit realised fromdisposal of investment in associates.Without the windfall, Flour Millswould have reported a meager profitof N287 million in the secondquarter. That is the only contributionfrom the company ’s normaloperations to the otherwise robustbottom line picture displayed at theend of the second quarter. That wasall the company saved forshareholders out of sales revenue ofN177.58 billion generated at the endof the second quarter. The companyfaces intense operating pressurefrom rising cost of sales and hugeinterest charges that haveundermined profit capacityconsiderably. Last financial year, saleof investment equally yielded awindfall of N14.28 billion, whichenabled the company to escape aloss that could have resulted fromhuge interest expenses of N18.70billion. Two major cost elements haveeroded profit margin in the corebusiness of the company and thestructure for profitable operationsappears to be missing presently.One is cost of sales, which accountsfor 90% of sales revenue. The otheris interest expenses, which rose by21.1% at the end of the secondquarter to N12.33 billion - close tothree times as fast as sales revenue.The company’s operating profit wasinsufficient to meet finance cost inthe second quarter.

The company’s operations run onhuge balance sheet debts. Despite asignificant reduction, the companystill has term loans of N63.74 billionand a bank overdraft of N39.42billion. There are also short-termloans of N46.58 billion andunsecured fixed rate bond of N9.23billion. The company will need tofree itself of much of theseborrowings for it to regain thecapacity to convert revenue intoprofit.

The company generated salesrevenue of N177.58 billion in thesecond quarter, which is an increaseof 7.3% year-on-year. Full yearturnover is projected at N359 billionfor Flour Mills Nigeria in the 2015/16 financial year. That would be agrowth of 16.6% against a decline of5.2% last financial year. Without thegain from disposal of investment, thecompany stood only a thin line

Flour Mills Nigeria: One step away from loss

MASTERCLASS -From left: Sola Adepetu, Non-Executive Director, Standard Chartered Bank Nigeria; YemiOwolabi, Executive Director, Finance, Standard Chartered Bank Nigeria; Bismarck Rewane, CEO, FinancialDerivatives Co. Ltd; and Leke Ogunlewe, CEO, Standard Chartered Capital and Advisory Nigeria, at FinanceMasterClass 2015 event organised by Standard Chartered Bank at the bank's Head Office, Victoria Island, Lagos.

between profit and loss at the endof the second quarter. Profit capacitywas further constrained by majordrops of 32.7% in other income and76.4% in investment income duringthe review period. Given the cost-income structure the company isoperating, no reasonable addition tothe profit figure is anticipated fromFlour Mills Nigeria for the rest ofthe financial year. After tax profit isis therefore expected to amount toN24.31 billion at full year - onlymarginally higher than the secondquarter closing figure. This willnevertheless be an outstandinggrowth of 187% over the precedingyear ’s closing net profit figure of

By MIKE UZOR

N8.47 billion.The company remains under cash

flow pressure, as net cash generatedfrom operating activities could notcover debt repayments and interestexpenses. Cash generated from saleof investment enabled the companyto meet substantially a net cashutilisation of over N27 billion fromfinancing activities. Without it, thecompany would have piled moredebts to meet serious cash flowpressure. Despite the windfall, thecompany still carries a cash deficitin excess of N23 billion.

In the midst of the cash flowdifficulties facing the company, it isnot certain if shareholders can hope

to share from the big harvest by wayof a decent dividend. The company’sdirectors declared a dividendholiday last financial year butwhether the bigger windfall fromsale of investment this year may endthe holiday isn’t foreseeable for now.

Nestle Nigeria: profit flat on slowsales, rising costs

Nestle Nigeria is unable to pushsales volume so far this year andrising operating cost haveencroached on margins and keptprofit flat. The food and beveragescompany suffered a slight decline inprofit last year with an increase of7.7% in turnover. This year, salesrevenue isn’t likely to grow as fastas happened last year but amoderate improvement in profit maybe possible at full year. Some costsaving is helping the company todefend profit margin and that is thekey operating strength for thecompany this year. Sales revenueamounted to N108 billion at the endof the third quarter, which is animprovement of 5.2% year-on-year.Full year projection indicates salesrevenue of over N145 billion forNestle Nigeria at the end of 2015.This will be a marginal increase of1.4% - the slowest revenueimprovement in many years. Thegrowth rate in the third quarter istherefore expected to slow down atfull year.

The ability to grow sales revenueis bound to be constrained as longas the company is unable to appealto consumers’ low cost sentiments.A low price response is needed tostimulate the consumer market at atime of low spending capacity. Thecompany said increased cost ofinput induced by the devaluation ofthe naira is the problem. The

26 — Vanguard, MONDAY, NOVEMBER 30, 2015

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Corporate Report

inability to transfer the costincrease to the market ishurting sales as well asprofit.

The company ended thirdquarter operations with aftertax profit of N17.24 billion,which is a flat growth of 2.2%year-on-year. After tax profitis projected at N23.8 billionfor Nestle Nigeria in 2015.The flat growth in the thirdquarter is expected to stepup to an increase of 7% at theend of the year.

Nestle Nigeriaimplemented efficiency andcost saving initiatives thatenabled it to contain risingcost of sales and thereforeimprove gross profit ahead ofsales. Cost of sales increasedby 2.8% against the 5.2%increase in sales revenue.That improved gross profitmargin from 43.2% in thesame period last year to44.5% at the end of the thirdquarter. Further costmanagement successhappened in respect ofadministrative expenses andmarketing cost. This enabledthe company to raiseoperating profit by 11.6% -more than twice as fast assales revenue.

However most of the costsaved was claimed byfinance charges, whichnearly doubled at the end ofthe third quarter. Financecharges amounted to N3.86billion, which claimed 15.6%of operating profit against8.8% in the same period lastyear.

The ability to defend profitmargin is the key strength ofthe company this year. Netprofit margin is slightly upfrom 15.5% at the end of lastyear to 16% at the end of thethird quarter. That informsan expectation of a moderateimprovement in after taxprofit at the end of 2015.Nestle Nigeria has notachieved a reasonablegrowth in profit over the pastthree years.

Management needs torecharge the company ’sgrowth momentum byfocusing on low cost highmargin products, which willbe an appropriate responseto the present conditions ofthe consumer market inNigeria.

The company has declaredan interim cash dividend ofN10 per share. The registerof shareholders closed on20th November and paymentis scheduled for 7th

December 2015.

•Mike Uzor is a financialanalyst based in Lagos.

Flour Mills Nigeria: One step away from lossContinues from page 25

Vanguard, MONDAY, NOVEMBER 30, 2015— 27

Banking & Finance

THE decisions of theMonetary PolicyCommittee (MPC) to

reduce the Monetary PolicyRate (MPR) to 11 percent andcut the Cash ReserveRequirement of banks to 20percent will not automaticallytranslate to economic growth,said economic analysts.

Faced with the sloweconomic growth in the threequarters of the year, theMonetary Policy Committee(MPC) of the Central Bank ofNigeria (CBN) at the end of itsmeeting on Tuesday decidedto relax monetary policy in abid to boost growth.Consequently the MPCreduced the MPR from 13.0percent to 11.0 percent;reduced the Cash ReserveRequirement (CRR) from 25.0percent to 20.0 percent; andfixed the Asymmetriccorridor of +2.0 percent and -7.0 percent around the MPR.

Commenting on thisdevelopment, Razi Khan ofStandard Chartered said, “Theeasing measures are aimed atboosting Nigeria’s realeconomy. How successfulthey are will depend on howmuch other bottlenecks,currently constraining real-sector activity, can beovercome”.

Kunle Ezun of EcobankTreasury Research teamexpressed similar views. Hesaid, “While this effort from themonetary authority to boostgrowth is commendable, it isnot automatic and mightrequire complementaryefforts and strategic policydecision from the fiscalauthority in the area ofinfrastructural renewal andsecurity to transform theeconomy”.

Similarly, FinancialDerivative Company (FDC) inits reaction stated, “Thoughthe new changes made to thepolicy rate and CRR indicatethe apex bank’s concern withthe slowing economic growth,the exchange rate and itspolicy implications is still anissue that the CBN will need toanswer. All eyes will nowmove to the January meetingand the 2016 budget of theFGN to see what the economicdirection of Nigeria is likely tobe.”

MPC measures not sufficient foreconomic growth — Analysts

•To reduce FG’s debt service burden•Inject N771bn liquidity into interbank market•Trigger capital flight, increased inflation

By BABAJIDEKOMOLAFE

In the shortterm, we do notexpect the easein monetarypolicy toimmediatelytranslate toincreasedlending to thereal sector

To reduce FG’s debtservice burden

According to the FDC, thedecision of the MPC will leadto 50 percent reduction in thedebt service burden of thefederal government. Thecompany noted, “But moreimportantly is the adjustmentof the corridor around theMPR to an asymmetriccorridor of +2 percent and -7percent. What this effectivelymeans is that the CBN willborrow at 4 percent p.a andlend at 13 percent p.a. By thissignificant move, the CBN willbe reducing the FGN debtservice burden by about a half.The Federal government debtservice burden in 2014 was inexcess of N1 trillion.”

N771bn liquidityinjection

Meanwhile, Afrinvest Plc inits comment stated that thedecision to reduce the CRR to20 percent will inject N771.4billion additional liquidityinto the interbank market.Commenting on how the MPCdecision will impact interbankliquidity and interest rates,the company stated, “The 200basis points (bps) cut in MPRand introduction of anasymmetric corridor aroundthe MPR at +200bps and -700bps is the most significantof the policy decisionsreached today as this bringsthe Standing Lending Facility(SLF) and Standing DepositFacility (SDF) rates to 13.0percent and 4.0 percent from15.0 percent and 11.0 percentrespectively. Prior to the MPCdecision, there has been a

regulatory maximum on theremunerable SDF placementby each bank at N7.5 billion.The MPC’s decision tocomplement this by a further5.0 percent cut in CRR will addapproximately N771.4 billionto liquidity level based onOctober data from the CBN. ”

Afrinvest however notedthat the increased liquiditywill not immediately translateto increased lending by banks.It stated,” In the short term,we do not expect the ease inmonetary policy toimmediately translate toincrease lending to the realsector, especially given thehigh risk retail/SME loanssegment. Structuralbottlenecks, weak quality ofinfrastructure and the currentslowdown in economicactivities constitute high riskto real sector lending, whichwould require moreadjustments by the fiscal

authorities to de-risk thesector. However, with therestriction on all cheapincome lines, we expect asignificant medium termexpansion in Credit to theprivate sector (currently atN19.1tn in October 2015 andup 6.8 percent Y-o-Y) byDMBs. This will necessitatebanks to improve on their riskmanagement framework toidentify opportunities andearn a relatively higher margin(compared to the cheap ratesin the fixed income market)and buoy assets turnover andshareholders’ return.”

Capital flight &Increased Inflation

Analysts at Afrinvest andFDC believe that the MPCmeasures could lead to capitalflight from Nigeria’s fixedincome markets and alsoincreased inflationarypressures. FDC analystsstated, “Already NigerianTreasury bills are yielding lessthan 4 percent p.a, much lowerthan the inflation rate. Asinterest rates have beenreduced, there may be capitalflight from the Nigerian fixedincome market, especially inlight of the anticipated ratehike by the US Fed inDecember. The growth in M2,which is -5 percent(annualised), gives someroom for increasing moneysupply without stokinginflation. However, the refundof CRR and the lower MPR willdefinitely lead to increase inanticipated inflation.”According to Afrinvest, “Therelaxed monetary stance ofthe MPC after its last meetingfor the year, though positivefor stimulating short-termeconomic growth, may notcome without negativeimplications for the economyin the medium term. With thereduction in interest rate,Nigeria is likely to faceincreased capital flightconsequences in the mediumto long term, more so if the Fedraises its benchmark interestrate at its next meeting inDecember.

“Equally, the spike infinancial market liquidityresulting from the reductionin CRR to 20.0 percent as wellas the expansionary 2016fiscal year is expected tofurther trigger inflationarypressure.”

CeBIH retreatexaminesmobilepayments forfinancialinclusion

*CBN Governor, Mr. Godwin Emefiele

The Deputy Governor,Operations, Central Bank

of Nigeria, Alhaji SuleimanBarau will lead banking andelectronic payment expertsand service providers toexamine the prospects andchallenges of using mobilepayments to drive financialinclusion at the 5thannualretreat of the Committee ofe-Banking Industry Heads(CeBIH). The theme of the two dayretreat is “Mobile Paymentsfor Financial Inclusion inNigeria - Prospects &Challenges” and isscheduled to hold fromThursday 2nd to Friday 3rd December 2015 in Uyo,Akwa Ibom State. The retreat which will bedeclared open by theGovernor of Akwa IbomState, His Excellency UdomEmmanuel will featurekeynote addresses by theDeputy Governor and theManaging Director/ChiefExecutive Officer, WemaBank Plc, Mr SegunOloketuyi. Technicalsessions would be anchoredby renown experts in theelectronic and mobilepayments space such as MrValentine Obi, ManagingDirector, eTranzactInternational Plc, Mr EricMuriuki Njagi from theCommercial Bank of Africa,Kenya and Mr. FrederikEijkman, Chief ExecutiveOfficer, PEP Intermedius,Kenya. Commenting on the retreat,CeBIH Chairman, Mr. TundeKuponiyi said, “The theme ofthe retreat was informed bythe recognition of theincreasing role of mobilepayments in removingtraditional barriers tofinancial inclusion, which isalso one of the aims of thecashless policy introducedthree years ago.According to availablestatistics over 36millionNigerians are financiallyexcluded i.e. they have noaccess to formal financial orbanking services. The CBNand all the banks howeverseek to ensure that this figureis reduced to the barestminimum by the year 2020. He said further, “Havingdeployed various channelsof payments – PoS, Web,ATM and Mobile, it veryobvious that the mostsuitable channel fortargeting and penetratingthe massive unbankedpopulation is the mobile andthis is easy to understandconsidering the rate ofadoption of mobile.

28— Vanguard, MONDAY, NOVEMBER 30, 2015

CMYK

Vanguard, MONDAY, NOVEMBER 30, 2015 — 29

30— Vanguard, MONDAY, NOVEMBER 30, 2015

Corporate Finance

The 2015 Stanbic IBTC Business Leadership Series wasa unique one. It featured two renowned innovators andguest speakers. And one of these speakers was aninternationally acclaimed rocket scientist, SiyabulelaXusa. Driven by an uncommon mission and strong beliefin self-actualization, he set out very early in life to makea difference in his chosen area of interest. At only 26,Xusa, has a planet named after him in recognition ofhis technological exploits. He spoke to newsmen at thesideline of the event on what Africa must do to achieve

Africa needsinnovation to bridgeunemployment gap– SIYA XUSA

Most Africansare tired of theaid; we don’twant to beseen asaccepting aid,and we want tobe seen asstandingcompetitivelyand withveracity whenit comes totrade.

sustainable development.NKIRUKA NNOROM wasthere and captured theinterview for Vanguard.

Success in building a newgeneration of leaders inbusiness depends to a largeextent on the existence of aneffective system, defined byappropriate policy directionand existence of an enablingenvironment. Have you seenany signs that we are on thepath of creating that kind ofmodel in Africa?

The bottom line is that Africa,right now, is faced with twofundamental forces. Firstly, isthe fact that we can’t over-relyon resources. If you take alook at the economy, we havelower commodity prices andthat is very fundamental. Thesecond fundamental point Ihave seen is that Africa is avery young population. About625 million Africans arebetween the ages of 16 and25. So, there is a hugepopulation that is young andwill be entering the labourforce.

Those two fundamentalforces have now madegovernments and businessesto be more conscious of thefact that the future of Africawould have to be based oninnovations because we needto be independent ofresources and we need tohave young peopleinnovating because thecompanies we have inexistence today won’t beenough to give the jobs thatare needed. Those two forceshave now shapedgovernments to takeentrepreneurship moreseriously.

Governments are taking theyoung generation moreseriously because the younggeneration is in the majority.The average age of an Africanpresident is in the high 60s,so we are being taken moreseriously and innovation isbeing taken more seriously.But having said that, there isstill a long way to go and thepath to follow is education.We should focus more onengineering, science andtechnology to ensure that wecan be globally competitive toembrace the opportunities inthe world and have the rightpolicies that make it easy for

entrepreneurs to do businessin Africa. For instance, themovement of goods andservices in Africa is hinderedby the visa regulations wehave in place. Americans aremore welcomed in Africa thanour African brothers. We couldchange that to make it easyfor Africans to move andinnovate across Africa. Moreimportantly, we should shiftour mindsets as Africans onwhat is possible. History hasnot being in our favour. So,we need to project ourachievements, the positivesabout Africa.

You have been at thevanguard of transformationin Africa. During yourpresentation, you mentionedthe next revolution, whichcould be economic as well asinnovation. What factorsunderscore your line ofthought?

aid, and we want to be seenas standing competitively andwith veracity when it comesto trade.

Talking about trade and notaid, it is very clear that weneed an economic revolution.Transforming the levels ofinequality across thecontinent has to be througheconomic revolution. We haveto innovate. We have to comeup with new ways of doingthings. We need to be able totake resources and come upwith things that have neverbeen done before. Africa isgrowing because we haveabundant mineral resources.But it is important we take theabundant resources andcreate high value addedgoods. Innovation isimportant and young peoplemust be at the forefront.

Leadership is obviouslyvery critical to this process.You just talked about the hugegap between the leaders(average age of 60) and thegoverned (average age of25), which is obviously achallenge. What otherchallenges do you seeaffecting the economic aswell as innovationrevolution?

I think the generational gapis already a challenge. But Ithink the bigger challenge isbetween the generations.There is nothing wrong withage. Age brings maturity, itbrings experience but therehas to be that clear line ofcommunication. Leaders oftoday must be in touch withthe reality of young peopleand young people of todaymust be conscious of thechallenges been faced by theleaders. It is about theincrease in communication.Access to education andopportunities are even biggerchallenges. A story like minecould happen in Enugu,Kano or anywhere in Africa ifyoung people have thataccess to opportunity. How dothey bring more access toopportunity? It is throughinvesting: investing inhealthcare, investing in anenvironment that enablespeople to thrive.

However, every challenge isan opportunity and what wehave seen from African andNigerian entrepreneurs are

people being rewarded forrising from those challenges.I will answer your question bysaying that I don’t see it as achallenge. I see thegenerational gap as anopportunity for young peopleto take the lead. As you areaware, institutions don’tcreate leaders; circumstancesin the situations createleaders. Mandela became agreat leader because of thesituation that South Africawas in. Challenges andopportunities will be thesituation that will create thenext level of entrepreneurialAfrican leaders.

Looking at the geo-politicalbalance, Africa is still tryingto leverage technology todrive growth anddevelopment, unlike the Westwhere the thought is newerways through strategy. Howcan we achieve a fine balancebetween deployingtechnology and achievingbusiness objectives?

Technology is simply partand parcel of an overallbusiness. We cannot say thattechnology would solve allthe problems becausesometimes the problem is notnecessarily technology, itcould be human factors. It isimportant for us to shift thatnarrative to say thattechnology is not the magicbullet to solve all the problemsbut it should be part of thesolutions. We must first solvethe basics like roadinfrastructure, rail networks(which is where industrialistscome in), power lines, powerplants, etcetera.

We can’t just think that theyhave technology that works inthe West; we must make itwork in Africa. Technology isa tool; it’s not the overlyingphilosophy. But we mustembrace it and apply it whereit is relevant.

What about the fixation withbusiness objectives and howbusinesses grow? How do weachieve sustainable growth?

The aim of being in businessis to make profit, both todayand in the future. The rapidrate at which the world ischanging requires everyoneto be aware of innovation andto embrace it becauseindustries are going to changefaster in the next 20 years thanthey have in the past 100-200years. We have seen theconfluence of multiple things;we have seen whatinformation technology hasbrought, what renewableenergy will do, we have seenthe increase in access andease of travel, people havebeen more connected, wehave seen what social mediahas changed. All these trendshappening in the world havecaused the world to change ata rate that it never has. Wehave what we call the networkeconomy, where Uber, AB&B,Facebook don’t have physicalstructures. I am not sayingcompanies should invest alltheir money in innovation butthey have to be aware of it,otherwise, they will be caughtoff guard. Too often, you seebig companies becomecomplacent.

Guinnessshareholdersapprove N5bndividends

By NKIRUKA NNOROM

A dividend of N4.8billion has beenapproved by

shareholders of GuinnessNigeria Plc for the periodended June 30, 2015 with apledge by the board andmanagement to maintain sustainable growth for thebusiness through good business strategies andquality products.

The dividends approvedtranslated N3.20 per 50 koboordinary share.

The Chairman of thecompany, Babatunde Savage,speaking at the 65th AnnualGeneral Meeting, saidalthough the operatingenvironment remaineddaunting during the periodunder review, the companyrecorded a credibleperformance in its full yearresults and is now poised forbetter performance in the2016 financial year andbeyond.

“Going into the 2016financial year, the board andmanagement are resolute intheir commitment to improvethe performance of thecompany and deliver greatervalue and return oninvestments to shareholders,”he stated.

Guinness Nigeria and itsparent company, Diageo,Savage said, remain stronglycommitted to supporting Nigeria’s developmentalaspirations throughstrengthening the country’smanufacturing base,employment creation,manpower development andfuelling overall economicgrowth.

In the area of corporatesocial responsibility, theChairman stated that thecompany has continued tomaintain a strong focus onimpactful projects across itshost communities, be it in thearea of health, waterprovision, environmentalprotection or road safety.

Responding to questions onthe issue of sanctions on thecompany announced by theNational Agency for Food andDrugs Administration andControl (NAFDAC) overalleged infractions, Savageemphasized that Guinnesswould continue to exploreevery path for a fair resolutionof the matter. “We have hadvery robust relationship withNAFDAC for as long as I canremember. We intend tomaintain that relationship.

•Siyabulela Xusa

The line of thought comesfrom looking at history andanalyzing history. The biggestconstraint to Africa in the past50 years was that there was alot of discrimination, ourcolonial past stunted growthand a big part of Africaclamoured for liberation. Thesecond point is that now thatwe have the liberation, nowthat we have stablegovernments in place, wehave the rule of law that hassomewhat been established inmost part of Africa, we needto create jobs, we need tocreate employmentopportunities. Most Africansare tired of the aid; we don’twant to be seen as accepting

Vanguard, MONDAY, NOVEMBER 30, 2015 — 31

Insurance

The Minister of Finance,Mrs Kemi Adeosun,

on Friday advised the NationalInsurance Commission(NAICOM) to rise up to itsresponsibilities and exploreuntapped potential. Adeosunmade the call at a retreatmarking the five years ofNAICOM’s existence in Abuja.The minister, who wasrepresented by the Director,Home Finance in the Ministry,Alhaji Kari Zakji, said: “Theinsurance industry needs to bepositioned to contributepositively to the GrossDomestic Product (GDP) andcreation of employment.”

“NAICOM can help achievethis by cleansing itself of thebad eggs within itself and byimproving its services to itsconsumers. NAICOM as anorganisation will be expectedto make efficient use of thefinancial and non-financialresources available to it.

In this regard, my ministrywill be looking to see astrategic, efficient and effectiveallocation and use of publicresources.” Adeosun urgedNAICOM to use the retreat tocome up with a strategic

PARTNERSHIP - From left: Mr Simeon Eyisi, Chairman, SIMS Nigeria Ltd; Mr Shinichi Wak-ita, Managing Director, Marketing, Middle East and Africa, Panasonic and Mr Hisao Ya-mane, Divisional Managing Director, Appliances company, india during during the partner-ship announcement between Panasonic and SIMS at the Oriental Hotel in Lagos.

Wake up to your responsibility, Adeosuncharges NAICOM

master plan to strengthen andrestructure the insuranceindustry. The NAICOM’sChief Executive Officer, AlhajiMohammed Kari, said theretreat was an avenue for thecommission to review what ithad achieved in the last five

years. We have reasons tobelieve we can do more toensure that insurancecontinues to be robust in thecountry.

“We plan to critically reviewour achievements and decidethe strategies to push forward

and those to drop. Also, werecognise the need for furtherdeepening of the insurancemarket so we will brainstormon strengthening the playersand encouraging consumers toutilise the services beingprovided,” he said.

In a bid to give itsemployee a voice inthe regulatory body

and a sense of belonging, theNational InsuranceCommission (NAICOM)assembled all cadres of its staffto chat ways of improvingefficiency, increase revenuesand reduce expenses in thecoming year.

The Commission lastweekend gathered its entirerank and file staff from acrossthe nation to Abuja for a two-day retreat in order to put theideas from the cadres of staffinto use ahead of 2016operation.

Commissioner for Insurance,Alhaji Mohammed Kari whilewelcoming the staff to Abuja,encouraged them to speak outon how best the Commissioncan function better in thecoming years.

Kari who expressedconfidence that NAICOM willbenefit the most from theretreat said, “We believe thatsitting together everybody willhave the confidence to speakopenly because ideas shouldcome from the bottom to the top,in most cases if you want tohave a fair opinion of anorganisation.

“This is an opportunity to

By FAVOUR NNABUGWU

...as NAICOM moves to improve service deliveryreally hear from everybodyfirst hand. Previously we havehad retreats where we havedirectorates retreat; eachdirectorate will sit on their ownand then come back and collectdirectorate resolution.”

The CFI was optimistic thatthe Commission will not onlyreview its past operations butwill, most importantly, chat newcourses for the supervisorybody to boost its efficiency andservice in the year ahead.

“We will take the opportunityto review the last five years,what we have done, see howmuch we have achieved andwhat we need to do more.Whatever we feel is to becarried forward, will be carriedforward. Some of the issues weare looking at has to do with

developing the market,strengthening the players,encouraging the stakeholders,that is, the consumers toprincipally benefit from theservices we have beenproviding.”

He also informed that theCommission is tinkling withthe idea of organising adirectorate retreat wheredirectorates can learn from oneanother in the best interest ofthe government institution.

“We are hoping to havedirector’s breakout, an openforum and a common plenary

section where all issues will bediscussed together therebymembers of one directoratecan contribute to the issues ofanother directorate.”

“We believe we are makingprogress and this will give usan opportunity to have aforensic look at what we havedone so far.”

Minister of Finance, Mrs.Kemi Adeosun who declaredthe 2015 NAICOM Staff retreatopened, said governmentexpectation of the Commissionis to make efficient use of itsfinancial and non-financial

Premium Pension Limitedhas made some

changes in the executivemanagement cadre of thecompany.

In a statement, the companysaid that the Executive Director,Operations and Services, Mr.Kayode Akande has moved tothe Business Development andInvestment Directorate toreplace Mr. Adamu Musa Melewho in turn takes over from himat the Operations and ServicesDirectorate.

Adamu Musa Mele, now theExecutive Director, Operationsand Services is a pioneer staff of

Premium Pension makes changes inexecutive management cadre

the company who played amajor role in shaping andstabilising its investmentdepartment before 2013 whenhe was elevated to the positionof Executive Director in chargeof the Business Developmentand Investment Directoratewhich comprises the Investment,Business Development,Contribution Collection andCustomer Care Departments. Heis a seasoned investment bankerwith over two decades cognateindustry experience. He holdsan LLB (Hons) BL, and MBAamongst several other local andinternational qualifications.

Zurich group to stopgeneral business inMiddle East

Zurich Insurance GroupPlc said it will stop

writing general insurancebusiness in the Middle East atthe end of the month becauseof the “limited potential” forprofitable growth.

The decision to exit generalinsurance in the region followsa company-wide strategicreview. Zurich remains“committed” to its life insuranceunit in the Middle East, whichwon’t be affected by thedecision, the company said ina statement. Zurich said it’sunclear how many jobs will becut.

The strategic change reflects“the challenges of building astrong and profitable franchiseacross multiple markets in theregion,” said Brian Reilly, chiefexecutive officer of Zurich’sgeneral insurance business inthe Middle East.

Switzerland’s largest insurerearlier this month announcedplans to cut jobs and exit somebusinesses in a reorganisationof its global general insuranceunit after the non-life businessreported a third-quarter loss.Zurich also intends toeliminate more than 400 jobsin the U.K.

The company will stopwriting new general insurancepolicies for retail and smallbusiness customers in theMiddle East by the end of themonth and plans to completelyexit by the end of 2016, thestatement showed.

Golden chancerewards hardwork

Golden Chance Lotto, alottery company in the

country, has rewarded at least30 of its sub-agents whoworked extremely hard in thelast three months. The luckywinners were given awards inthree categories of which thehighest category was awardedwith ten tricycles and cash sumof N30,000 each.

The other categories are thosethat won double door deepfreezers and television sets,they were also given cash sumsof N20,000 and N12,000respectively.

Speaking at the awardceremony, Managing Directorof Golden Chance Lotto, Mr.Charles Arthur said that theaward that was given to thewinners is as a result of theirhard work .

He said that without the sub-agents, the rewards wouldn’thave been possible becausethere is no time you don’t seethem working. Even when it’sraining, they are there workinghard and encouraging peopleto come and play the game.

We believe weare makingprogress andthis will give usan opportunityto have aforensic look atwhat we havedone so far

32 — Vanguard, MONDAY, NOVEMBER 30, 2015

Business & Economy

unfold. Chief Murako’s wakeup call comes in the nick of timeas the Nigerian LabourCongress is once again gettingready for a show-down withgovernments. Unfortunately,Murako’s warning will fall onthe usually deaf ears of officials.Below, I reproduce excerptsfrom two warnings issued in2011 and 2014 respectively topublic officials and thoseaspiring to public office. Themost pathetic are those whorecently got elected – they have,individually and collectivelylanded in political hell. Read on.

MW: WHY GOVERNMENTSCAN’T AND SHOULDN’T PAY

“We have no problem withlabour; everything is clear, butwe cannot go against the law.The only way we can raisemoney is through budgeting.Another budget season isaround the corner, so that wecan commence theimplementation of the law from2011”.

Anyim Pius Anyim, Secretaryto the Government of theFederation on Minimum Wage.

PreambleIf anyone had told me I would

be defending PresidentJonathan and all the 36Governors as well as the LocalGovernment Chairpersons a fewweeks ago, it would haveappeared to me as total lunacy.Yet, here we are, at a nationalcross road on the controversialissue of Minimum Wage

Can Nigerian states gobankrupt? (1)

It is unthinkable that wisdom should ever be popular”, Johann Goethe, 1749-1832, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 275.)

“The Chairman Fiscal Responsibility Commission, Chief Victor Murako, has warnedof a possible shutdown by some states of the federation in the next six months unlessthey find creative ways of handling their dwindling allocations from the federationaccount.” PUNCH, November 24, 2015.

You bet they can; and at least two are technically bankrupt now. Those offeringthem credit do so at considerable risk. One of the saddest things for an economistdeeply loyal to his country is to observe as calamities foretold to his countrymen

implementation and each of usis called upon to take a patrioticstand. Let me start by statingthat President Jonathan and theNational Assembly, NASS,should not have signed the billunder duress as they did inMarch of this year. The NigeriaLabour Congress hadthreatened “No MinimumWage; No Elections”. Andgovernment had caved inwithout conducting duediligence on the financialimplications of the bill. Thatwas weak leadership; especially,when the 2011 AppropriationBill itself had not been sortedout by the two branches ofgovernment at the time ofsigning.

If the President had taken timeout of his busy campaignschedule to take a look at thebudget before the NASS, hewould have noticed that theestimates for wages andentitlements were based on thewages existing in 2010 with aminimum of N7,500. Noprovisions have been made forthe 150% increase whichN18,000 represented. The sameis true of the state and local

governments. And, let meagain exonerate the Presidentand Governors for not “pro-actively” including the increasethrough a “Contingencyprovision” in their budgets.Nobody provides for 75%increase in expenditure duringthe coming year. So, they aretotally blameless in that respect.

The question can fairly beraised: Is the government notmorally obligated to pay oncethe President had signed thebill? This, it must be confessed

presents an ethical dilemma.This writer had carpeted thePresident several times for notupholding agreements. So, whyis it difficult to ask him toredeem this one? For me, thedilemma is resolved by pointingto the threat by labour to disruptan election on which thegovernment had invested overN100 billion. Jonathan wasblackmailed! And he did whatany sensible leader would dounder the same set ofcircumstances. He signed acontentious bill. Now thecontroversy confronts us. And,for once, we should stand by thePresident.

Back to basics“Nor should we listen to those

who say, ‘The voice of the peopleis the voice of God’, for theturbulence of the mob is alwaysclose to insanity’. — Alcuin,735-804.

We have tried everything else,in our discussions on theMinimum Wage Act of 2011, wemight as well try the truth.Senator Anyim finally admittedwhat, to highly discernibleindividuals, was known to bethe truth but which sentiments

and the noise of the ignorantminority, the only beneficiariesof the Minimum wage Act willnot allow to be said or heard.The Secretary to the FederalGovernment has not only toldall of us why government can’tpay. But, he had also, perhapsdeliberately and diplomatically,confirmed some of the reasonswhy they should not pay. Andthis applies to governments atall levels – Federal, States andLocal Governments. TheNigerian Labour Congress,NLC, and their supporters,including most of my colleaguesin the media, would be welladvised to look forward to thewage increase starting 2012.Right now, there is no money topay as the SGF has rightly said.Permit me to briefly explain,even at the known risk that thisis not going to be a popularview. That is fine by me. Not alldecisions can be made by simplemajority – especially when themajority is largely ignorantabout the subject. It is fact thatfew Nigerians have studiedeconomics, public finance andbudgeting. Yet these are thecrucial issues at stake.

That was in 2011. This wasfollowed in 2014 by anotherarticle pointing to the dangersahead – the dangers which nowstare all the state governors inthe face. I know at least twowhich are now on the brink.Read on.

“

TRAINING - Courteville’s executive management with bestgraduates of its recently concluded Middle ManagementTraining program. From left, Femi Niyi, Executive DirectorProjects & Strategy, Oye Ogundele, Executive Director, AfricaExpansion, Rotimi Olaoye, Deputy Managing Director,Finance and Admin, Mariam Adebimpe, MMT graduate,Adebola Akindele, group managing director, Joanna Ogini,MMT graduate, Adewale Sonaike, Deputy ManagingDirector, AutoReg Franchise, Olutosin Kalejaiye, MMTgraduate, and Olayiwola Adedayo, head, Risk Management.

Seventeen young managershave completed the

gruelling Middle ManagementTraining (MMT) Level 1program organized byCourteville Business SolutionsPlc. The 9-month long intensiveprogram, the first in a tieredseries, was conceived to identifyand nurture budding in-housetalent to fill leadership positionsat the fast-growing e-businesssolutions and business processoutsourcing company. At aconvocation ceremony heldrecently, Adebola Akindele,Courteville’s Group ManagingDirector, expressed hissatisfaction with the progressmade by the graduates.

In his commencementaddress, Akindele harped onthe need for companies todevelop a deep managementbench by identifying andinvesting in future leadersearly. He cited Sir RichardBranson of the Virgin Group’semployee retention mantra asthe company ’s guidingprinciple. To train people wellenough so they can leave, andtreat them well enough so theydo not want to.

Courteville grooms next generation leadershipHe told guests at the event

that Courteville’s ambition is tobecome one of the two bestplaces to work in West Africa.In line with this aspiration, aTrust Index (TI) survey recentlycarried out by Great Place toWork Nigeria attested toCourteville’s prime rankingamong global and local ITsolutions companies.

Courteville, which turns 11 inJanuary, is facing increasingdemands for premium gradepersonnel as it embarks on aninternational expansionprogram and introduction ofnew suites in its diversifiedservices portfolio. Thecompany’s AutoReg motorvehicle and administration(MVAD) platform handles the

registration of eight out of everyten vehicles on Nigerian roads.

Early this year, anindependent HR auditcommissioned by the company,commended Courteville forputting in place innovative staffengagement activities,mentoring practices and atransparent employeeevaluation policy. The audit alsorevealed a dumbbell in thestaffing structure. The discoveryof a thin middle managementcadre and the board’s desire fora robust succession plan servedas the inspiration for the MMT.

The basic idea behindCourteville’s MMT is to offer afast-track leadershipdevelopment training internallyto promising young employeesthat would enable themtransition to roles of greaterresponsibility at an acceleratedrate. The decision to run theprogram in-house, a path lesstaken by most companies, wastaken to maintain Courteville’scultural DNA, save costs, andstrengthen a sense of stake-ownership among promisingyoung employees.

In total, the curriculum

consisted 14 rigorous courses.It covered areas as diverse asEmotional Intelligence,Presentation Skills,Performance Management,Financial Investment,Operations Management,Team Building, and, of course,Human Capital Management.

In addition to the courses, theprogram incorporated a numberof unique elements. GMD-for-a-Day exposed the courseparticipants to the work of thegroup managing director. Aparticipant would be selected tofill in the role of the GMD for aday, sit at his desk, answer hiscalls, respond to his emails,attend his meetings, and dealwith issues that arise on thatday. It was a pressure-filled eyeopener on the demands ofleadership for all 17participants. AnEntrepreneurship Series inviteddistinguished business leadersto share their experiences withthe participants. Some notablespeakers include ChidiAnyaegbu, founder of ChiscoGroup of Companies,Akinsowon Dawodu, chiefexecutive officer of CitibankNigeria, and Yetunde Allen,chief executive officer of CleanBusiness Practice Initiative.

Jonathan wasblackmailed!And he didwhat anysensible leaderwould dounder thesame set ofcircumstances

Vanguard, MONDAY, NOVEMBER 30, 2015 — 33

CMYK

E-Commerce

P a r t n e r ,P r i cewate rhouse

Coopers, PwC West Africa TaxLeader, Mr. Taiwo Oyedelehas identified taxation ofelectronic related businessesas one of the greatestchallenges confronting theglobal economy.

Oyedele stated this during apress briefing at the sideline ofa forum organised by PwC fortax administrators and other

Taxation: Why digital economy remains elusive — OYEDELE

Stories byJONAH NWOKPOKU

stakeholders on the ease ofpaying tax in Nigeria.

He said: “It is difficult to dealwith the digital economy. Lets’take Amazon for instance. Ifyou want to order anything,you can just open your laptopor mobile phone, connect to theinternet and you can order.Assuming you have ordered amobile phone, the mobilephone in Nigeria is liable toValue Added Tax, VAT butAmazon is not a Nigeriancompany. They are supposedto charge VAT but do not evenknow that there is VAT in

PRESS CONFERENCE - From left: Global Head of Cybersecurity, KPMG, Uk, Mr Malcolm Marshall; Partner& Head, Risk consulting KPMG Nigeria, Olumide Olayinkaand Partner, Information protection & Business Resilience(II),KPMG UK, George Quigley at the Cybersecurity pressconference by KPMG Nigeria in Lagos.

Nigeria and they are not eveninterested. So the phone is $50for instance and they ask youto pay just $50. They cannotput VAT on it. So even if youlook at origination anddestination principles of taxcompliance, which means theVAT, should be collected atdestination which is Nigeriabut who should collect it? TheNigerian tax authorities saidAmazon should have chargedit and they say go and collectfrom Amazon. But if you arelucky to even go to whereAmazon is, you will be lucky if

you come back. This is because;you have crossed yourjurisdiction. What power do theNigerian tax authorities haveover an American company inAmerica? No one can everenforce that law.

“The other option is chargingthe person who ordered thephone to collect the VAT.Imagine the millions ofNigerians who make purchasesfrom Amazon. The cost ofattempting to collect VAT from

them alone will be more thanthe tax you want to collect. Thisis because, one tax officer mustbe aware of the phone, wherethe buyer lives, how much itcost - maybe trying to getinformation from MasterCard,which is another challengebecause they will argue thatthey have a confidentialagreement with their customersand cannot release theirinformation.

Skye Bank Plc hasunveiled an online store

which is specifically dedicatedto the sale of made in Nigeriaproducts and services.

Speaking during theunveiling of the online mallin Lagos, the GroupManaging Director/ChiefExecutive Officer of SkyeBank Plc, Mr. TimothyOguntayo, said the bank cameup with the platform afternoticing that some SMEoperators find it difficult to

Skye Bank launches online shop, YesMallsell their goods as most of thefinished goods end up as inventory in the warehouses.

He said: “Available statisticsshow that the e-commercesector in Nigeria currentlyboasts of about 300, 000 onlineorders daily. Our desire atSkye Bank is to substantiallygrow these figures and makee-commerce the new tradehighway in Nigeria. Theintroduction of YesMall istherefore a deliberate strategyto live the spirit of our mission

statement which is usingtechnology to drive innovationand enable consumerlifestyle.”

He described the YesMall asan e-commerce platformwhich offers Nigerians cost-effective opportunities to buyand sell online from thecomfort of their homes. TheMall will also provideopportunities for manyIndigenous Entrepreneurs toshowcase their products to aborderless market

34 — Vanguard, MONDAY, NOVEMBER 30, 2015

Economy

There is indicationthat tax

revenue may notsignificantly cushionFederal Government’simpending huge deficitprojected for 2016budget as expected taxrevenue in 2016 fiscalyear is about N4.5trillion.

According to theprojections of theFederal InlandRevenue Services,FIRS, tax revenuegrowth is around 10 percent as againstexpected expendituregrowth of over 100 percent in 2016 fiscal year.

FIRS ExecutiveChairman, BabatundeWilliam Fowler, duringhis screening forconfirmation as thesubstantive tax mastergave a hint to this.

Federal Governmenthas planned to spendabout N8.1 trillion innext year ’s budget,almost double the N4.3trillion slated for 2015which was about 10 perlower than N3.9 trillionin 2014.

When the news of theimpending hugeexpenditure profile ofthe new government atthe centre filtered outthrough the VicePresident, ProfessorYemi Osinbajo, manyanalysts expected anequally huge taxmeasures and inflow.

But not only didFowler indicatemarginal increase intax revenue he alsoindicated that theproposed 100 per centincrease in ValueAdded Tax, VAT, willnot take effectimmediately, addingthat he would notemploy tax drivingagents to shore uprevenue as he did inLagos State from wherehe recently moved toFIRS.

FIRS had missed its

Rise in taxrevenuemiss-matchesexpendituregrowth

By EMEKA ANAETO,Economy Editor

•Babatunde Fowler

revenue target in thethird quarter of the yearwhen actual collectionwas N980 billionagainst N1.143 trilliontarget.

Tax revenue hadtaken a bashingrecently when thePetroleum Profits Tax, amajor component ofFIRS inflow,underperformed bymassively missing itstarget of N1.48 trillionto settle at N1.1trillion.

Fowler had said thatover 200 oil and gascompanies operating inthe country have notfiled their tax returnsfor the year.

Also he said that dueto the significant dropin oil prices, he saidthat a huge gap existedbetween the revenuegenerated by the FIRSand the total revenue byother governmentagencies like theNigerian NationalPetroleum Corporation,Department ofPetroleum Resourcesand the NigeriaCustoms Servicebetween July andSeptember this year.

He pointed out that the

decline in oil revenuehad made it necessaryfor the FederalGovernment to focus onnon-oil taxes.

As a result, heexplained thatcompliance wasexpected by allorganisations and thatthe agency was preparedto remove bottlenecksassociated with taxcollection, adding thatone such way was jointtax audits of companiesby the FIRS and thestates’ Boards ofInternal Revenue.

Other interventions,according to him, are“nationwide taxregistration drive, withfocus on VAT, whichcommenced on October12, 2015, to bring in allunregistered taxpayersinto the tax net”.

The concern of manyfiscal policy analysts isthat the widened gapbetween tax revenueand the federalexpenditure plan at atime oil revenue was onthe downside would meextensive borrowingswhich will drive up thecountry’s debt-to-GDPratio.

The ratio of a country’snational debt to its GDPcompares what a countryowes to what itproduces, indicating thecountry’s ability to pay.

Nigeria’s Debt-to-GDPratio averaged 34.26 percent from 2000 until2014, reaching an alltime high of 88 per centin 2001 and a record lowof 10.50 per cent in2014.

Fowler said theproposed N8.1 trillionbudget for 2016 isrealisable, adding thatOsinbajo was not awareof the FIRS projectionbefore disclosing theproposed budgetfigures.

Tax revenue hadtaken a bashingrecently whenthe PetroleumProfits Tax, amajorcomponent ofFIRS inflow,underperformedby massivelymissing itstarget of N1.48trillion to settleat N1.1 trillion

Vanguard, MONDAY, NOVEMBER 30, 2015 — 35

Sponsorship: MTN and manner of giving back

Micro-Finance

Sponsorship is the fastestgrowing form of

marketing globally. Thereforethe primary reason companiesinclude sponsorship as part oftheir marketing plans is toincrease brand awareness,whether it’s establishing orstrengthening the brand, or tochange their brand image thatsubsists.

However, by associating abrand with an event or entitythat the target audience viewspositively is by way of shapingattitudes and helping togenerate a positive reaction tothe brand. Ultimately, the goalis to improve how a brand isperceived by its targetaudience. This happens in avariety of ways.

For this reason a brand needsto build relevant memorystructures that make it easierto notice, recognise, recall andhence.... of course...buy. Thisis the brand’s mentalavailability.

several other brands havekeyed into this phrase tostrengthen and build top- of-the- mind- brand.

MTN Nigeria recentlysponsored 12 of its loyal andcommitted customers to thisyear ’s hajj to fulfil theirreligious obligations afore the

Media & Advertising

Stories byPRINCEWILL EKWUJURU

disheartening occurrence ofthe stampede in SaudiArabia.

Like every other years theICT Company sponsors 12lucky winners to participate inthis yearly pilgrimage, beforethe unpleasant incident of thestampede in Saudi Arabia. Theincident brought the totalnumber of casualty to 700, withthe Nigerian pilgrims sharingin the scores of those that diedwhile observing and fulfillingtheir Islamic rite, which is acommandment in the HolyQuran.

Speaking during the arrivalof the winners, the GeneralManager, ConsumerMarketing; Richard Iweanogecondoled with the families ofthe departed saying it is agreat loss not just for their

immediate families but also forthe entire country. ‘’ We

sympathize with the families ofthose who lost their life whilefulfilling the Islamic rite ofhajj, and also welcome backother pilgrims who made itback into the country with theirspiritual experience from theholy land” he said .

He further stated that MTNNigeria has made it a yearlycommitment to connect andreward Muslims customerswho have subscribed to variousIslamic contents. ‘’ Therationale behind this is toeducate and broaden theknowledge of our Muslimcustomers especially duringthe season of umrah and hajj”.

The leading ICT operator

organized a seminar for all the12 winners before theirdeparture to Saudi Arabia forthe pilgrimage. The convenerof the seminar; UsthazSuleiman Felani explained indetails all that the winnersneed to know and do whenthey arrive Saudi Arabia. In hispresentation, he advised thepilgrims on what to wear, asthere won’t be any need todress gorgeously but ratherfocus on the pilgrim to the holyland. This according to him isto explain the simplicity of life.

He preceded his over twohour lecture with visuals forbetter understanding of thehajj pilgrimage.

Lafarge Africa Plc, a leadingSub-Saharan Africa

building materials company hasbeen bestowed with three awardsat the 2015 edition of the SocialEnterprise Report Awards,SERAs, which aimed atencourage organization to domore in area of impactingpositively in the environmentwhere they operate and societyat large.

The prestigious event whichwas held at the Muson Centre,Onikan Lagos, under the theme‘Building Partnership for aSustainable Future,’ saw thegiant cement building solutions

SERAs 2015: Lafarge wins three awardsprovider company shined in areaof Best Company inEnvironmental Sustainability,Best Company in SustainabilityReporting, and Overall secondrunner-up at the 2015 edition ofthe annual Awards ceremony.

The company opened the flowby winning the first awardcategory as the Best Companyin Environmental Sustainability,which had three other nomineesincluding GTBank, FCMB andNigerian Stock Exchange(NSE). Lafarge subsequentlywon the Best Company inSustainability Reporting withnominations into eleven different

award categories.Speaking on the awards

conferred on the company,Group MD/CEO, Lafarge AfricaPlc, Peter Hoddinott said addingvalue to its host communitiesand the lives of Nigeriansremain the core of thecompany’s CSR interventions,while assuring that “the awardswill spur Lafarge Africa Plc toremain committed to sustainablesocial investments across thecountry, particularly in the areasof health and safety,environment, youthempowerment and provision ofinfrastructure”.

Friends of Special People(FOSP) also known as

Friends of the Disabled(FOTD), Vocational Centre,weekend, send forth about 11youths with disabilities whohave made up their minds tosurvive by accepting andlearning skills that includesthem into the main stream of theSociety.

Some of the graduatesacquired various skills fromvocations in shoe and leatherworks, Tailoring, Fish farmingand Help services.

Founder of the vocationalcentre, Mrs. Aku ChristyOrduh, said that the attitudeand discrimination linked todisability make it much moredifficult for them to go to school,to find work or participate insocial activities, stressing thatin many communities, bothrural and urban, theenvironment is challenging

GRADUATION- From left: Mrs.Aku Orduh,ExecutiveDirector,graduatingmembers, Mrs.Akah, Board ofTrustee memberand Mrs. SussyAtionu,Advisory BoardMember of FOTDVocationalCentre.

Skill acquisition: Bettering youths withdisabilities via FOTD initiative

Stories byPROVIDENCE OBUH

with physical andcommunication barriers thatmake it hard for them toparticipate in social life.

Orduh who is a retiredteacher said, “here in FOSP, ourenvironment is disabilityfriendly and offers opportunityfor talent development and weare looking forward to replicatethis beyond states and regions.There have been awarenesscampaigns and enlightenmentprogrammes on their specialneeds that is necessary for theirinclusion in the community.ninety five percent of those indisability projects are intoawareness and enlightenmentcampaigns leaving theimplementation to a few. OurAwareness and enlightenment isenshrined in ourimplementation programs whichhas resulted in the graduation.”On how the centre receivessponsors she said, “we don’thave sponsorship, the FederalGovernment sometimes help orbuy equipment for some but forthe day to day training and

maintenance of the instructors nobody helps us, we do it alonewith a few others who care toshow support.

Example is Society ofPetroleum Engineers (SPE) whohelped in sponsoring threegraduands; present and pastPartners include: MTNFoundation, Fed Ministry ofWomen Affairs, NationalDirectorate of Employment(NDE), Universal Basic

The Institute of creditadministration, ICA,

has said that there are noaccurate statistics to pay FederalGovernment’s N5,000 monthlyallowance to unemployedyouths in the country.

Registrar/CEO, ICA, Prof.Chris Onalo, made the positionin a chart at the CreditManagement Honours Award inLagos, where he said thatpoliticians would want to stand

N5,000 unemployed allowance: Do we haveaccurate statistics? — ICA

by their promises so that theycan win future elections.

To this end he said, “but thishas a very far reachingimplication on the economy ofthe country. You don’t just wakeup and say I want to pay joblesspeople N5, 000 on a monthlybasis, how is that sustainable inan economy that is not in its fullswing and the industrial sectoris still in comatose. “Theeconomy is import driven, we

have not diversified theeconomy, the strength of theeconomy is shrinking, which isthe oil, sustainability nowbecomes the big question andhow many are the joblesspeople.

“Do we have accurate statistics,what guarantee have been putin place to avoid infiltration, ifyou multiply the number ofjobless people by N5000.

Education Commission (UBEC),NYSC Lagos State, SNEPCO, St

Vincent D Paul ldumagbo and ahost of others.

AWARDS - From Left Association of Advertising Agenciesof Nigeria, AAAN, Executive Director, Mr. Lekan Fadolapo,Mr. Kayode Oluwasona, Vice president, AAAN, Mr. Enyi EnyiOdigbo, Past President, Mr. Kelechi Nwosu, AAAN Presidentand other at the AAAN –LAIF Awards in Lagos.

Omoh Gabriel - Group Business Editor

Babajide Komolafe - Deputy Business Editor

Clara Nwachukwu - Energy Editor

Peter Egwuatu - Asst. Business Editor

Yinka Kolawole - Snr Bus. Correspondent

Favour Nnabugwu - Insurance Correspondent

Godwin Oritse - Maritime Correspondent

Godfrey Bivbere - Maritime Correspondent

Michael Eboh - Energy Reporter

Franklin Alli - Industry/Agric. Reporter

Ifeyinwa Obi - Maritime Reporter

Rosemary Onuoha - Insurance Reporter

Nkiruka Nnorom - Capital Market Reporter

CONTRIBUTORS

Princewill Ekwujuru - Media/Marketing

Jonah Nwokpoku - E-Commerce

Naomi Uzor - Industry

Providence Obuh - Micro Finance

LAYOUT - Graphics Department

(0805 220 1997)

36— Vanguard, MONDAY, NOVEMBER 30, 201544

Business & Economy

Muhamadu Buhari’souster from power in

1985 clearly attracted jubilationsin several quarters, particularlyfrom those who decried the ironfisted enforcement of socialdiscipline; but three decadeslater, he was, inexplicably, sweptback to power, in an infectiouscarnival-mode campaign, as thearrow head of the change,Nigeria urgently requires torechart its trajectory and restorehope for a better life for itscitizens.

Despite his advanced age,there is clearly no doubt abouthis passion and commitment tothe unfinished business ofbuilding a country that we canall proudly call our own.

President Mohamadu Buhariis, expectedly, constitutionallyempowered to manage oureconomy for the greater good ofmore Nigerians by adoptingbest practice fiscal and monetarystrategies to achieve thispurpose.

Instructively, best practicemanagement of fiscal andmonetary instruments willtransform a ‘ resourceless’landscape like SINGAPOREand JAPAN into stupendouslyprosperous communities, whilemisalignment of the samestrategic instruments coulddegrade the owners of anaturally well endowed,resource rich country likeNigeria, into impoverished anddisadvantaged specie of humankind. Curiously, there appearsto be a discomforting inversecorrelation of deepeningpoverty, existingsimultaneously with reserveswhich are consistently in excessof $30bn in an economy thatremains eternally awash withembarrassingly surplusspending values.

So, what would Buhari do toradically reinvent hisadministration’s fiscal andmonetary strategies, so as to turnaround and boost the efficacyand yield of positive economicand social dividends. Recently,Vice President Osinbajo

Is CBN’S MPC strongerthan Buhari?suggested, at a retreat forministers-designate in Abujathat allocation for capitalexpenditure will be increased toabout N2Tn in the proposedN7-8Trillion 2016 budget.Clearly, even if the projected$10bn capital vote is judiciouslyapplied, the impact will still beinsignificant, when comparedwith the speculated immediateinfrastructural deficit of wellover $100bn!

Furthermore, Vice PresidentOsinbajo has also suggestedthat with depleting oil revenue,the over 70% projected increasein the 2016 budget, would befunded with additionalborrowing while the Nationaldebt will require increased debtservice charges of almost N1Tn($5bn) or 12.5% of total budget.It is nonetheless, inexplicable,and worrisome that Nigeria’stotal debt is currently in excessof $60bn, in place of the earlierwidely condemned $30bn thatelicited so much publicconsternation when $18bn wascontroversially fleeced from ourpockets by overseas creditors,ten years ago.

Consequently, thisexperience, advises that weshould be wary of external loansdenominated in foreignexchange, especially, when theNigerian money market stillremains interminably awashwith hundreds of billions ofironically idle funds that can bemarshalled for investment inagriculture, infrastructure andhuman capacity building todrive inclusive growth.

It is also becomingincreasingly clear that thepresent Administration’sselective sectoral support maynot be too different from thestandard process of offloadinghundreds of billions ofintervention funds into a money

market that is perenniallysuffocated by a burden ofsurplus cash. It is instructive, forexample, that despite severalspecial provisions to the Textilesand Aviation sub-sectors and thespecial allocations for theenhancement of Agriculturalvalue chain by previousadministrations, remarkablesuccess has so far remainedelusive.

In the event of these serialfailures of fiscal management,Buhari may have to relyprimarily on the efficacy ofmonetary strategies tosuccessfully turn around theeconomy. Curiously, however,the responsibility for designingand implementing sensible andappropriate monetary policies,constitutionally resides with theCentral Bank of Nigeria and itsMonetary Policy Committeerather than the President. Thus,‘If the CBN and the MPCsuccessfully manage Moneysupply effectively, inflation ratewill fall to best practice levelsbelow 2%; with such outcome,purchasing power of all incomevalues will become preserved tosustain healthy consumer

demand which will inturnstimulate further investmentand increase job opportunities.Conversely, consistently faultymanagement of money supplywill trigger unrestrainedinflation which will distortgovernments’ budgetprojections, impoverish ourpeople, particularly pensioners,and make the realisation offorward plans a majorchallenge.

Additionally, best practicemanagement of money supplywill similarly facilitate singledigit interest rates that would beless oppressive and lessrestraining to investments in allsectors of the economy; indeed,critical sectors, such asagriculture, food processingand education could attract 0-2% interest rates, as applicable,for example, in Japan, toencourage active private sectorparticipation.

Incidentally, the CBN’s MPCdecided at its 104th meeting inAbuja last week to reduce itsBenchmark interest rate (whichsets the pace for domestic banklending rates) from 13 to 11%.Regrettably, if the erstwhile 13%policy rate induced commerciallending rates between 23-27%,then the new 11% benchmarkmay only marginally bring downmarket rates to about 20%,instead of the more appropriateand supportive single digit ratesrequired to truly encourage newinvestments, economicdiversification and job creation.

Furthermore, in its attempt toinject liquidity into the bankingsystem, CBN’s MPC lately alsodecided to reduce the cashreserve commercial banks musthold to 20% from 25%.Evidently, even though thisdecision may appearprogressive, it is clearlymisguided and

counterproductive in a moneymarket which is perenniallyburdened by excess liquidity,which has to be constantlymopped up by CBN byborrowing and farcicallykeeping idle the proceeds ofsuch loans, despite theattendant high interest rateswhich are not consonant withsovereign risk free borrowings.

Additionally, appropriatemanagement of Naira supplyvis-a-vis other foreigncurrencies, would alsoinevitably guarantee a strongerNaira market value; which willmake the local currency, toremain attractive as a store ofvalue, rather than sufferrejection like a street urchin.Instructively, our recent historyof unrestrained Naira liquidityhas continued to pummel theNaira exchange rate,paradoxically, even whenCBN’s reserves steadily climbedas high as $60bn.

Thus, Buhari must feelhelpless, like earlier Presidentsbefore him, that the enshrinedautonomy of the CBN and itsMonetary Policy Committee forensuring price stability, clearlyrestricts him from breachingCBN’s territory on monetarypolicy management.

In recognition of theenormous powers and pervasiveinfluence of a Central Bank inevery economy, one of theillustrious Pioneers of thetemplate for modern banking, acertain Mayer Rothschild,insightfully observed as followsin 1790:

“Give me control of a nation’smoney supply, and I care notwho makes it’s laws.”

Thus, inspite of Buhari’sundenied passion for positiveeconomic and social change,not even his best efforts andcommitments nor the additionalcapacity of an eminent cabinetwill unseal the failure of thisadministration, if the CBN andMPC continue to fumble withthe management of moneysupply.

•SAVE THE NAIRA! SAVENIGERIANS

IPMAN partners PAN, Access Bank on car acquisition

In the event ofthese serialfailures of fiscalmanagement,Buhari may haveto rely primarilyon the efficacy ofmonetarystrategies tosuccessfully turnaround theeconomy

The IndependentPetroleum MarketersAssociation of Nigeria

(IPMAN) yesterdaypartnered PeugeotAutomobile Nigeria (PAN) and Access Banl in thePeugeot Car acquisitionscheme for its membersnationwideSpeaking at the event inAbuja, the National Presidentof IPMAN, Elder ChineduOkoronkwo said the schemeis to help members acquirebrand new cars in order toease their mobility andimprove their welfare.He said, the scheme will in nodoubt, create a level ground

for the promotion andactualisation of made inNigeria product therebycreating jobs for the youths.“These patronages for madein Nigeria product will createmore jobs for the youths inNigeria which will helpreduce unemployment in thecountry,” he said.Also speaking, the ManagingDirector PeugeotAutomobile Nigeria, PAN,Alhaji Ibrahim Boyi said, Panhas been leading automobileplant in Nigeria for the past45years. According to him, most ofthe auto technicians andmechanics we have, are

either product of PAN ormade by PAN, adding thatPAN is very conscious of thatprovision in market. “We are very proud of ourproducts in terms of quality,performance, real efficiencyand the operation cost ofrunning. Our products arelower and the ownershipcost is exceptional,” he said. He further added that withmore patronage, PAN isgoing to create more jobsopportunities foremployment, investmentwhich he said will helpdevelop the Nigeriaeconomy.