financial vanguard february 11th 2013 edition

CMYK

CusCusCusCusCustttttomeromeromeromeromers fs fs fs fs flalalalalay CBN’s bank accounty CBN’s bank accounty CBN’s bank accounty CBN’s bank accounty CBN’s bank accountcategorisation policycategorisation policycategorisation policycategorisation policycategorisation policy•Banks: It’s a welcome development

BY PETER EGWUATU, YINKAKOLAWOLE, MIKE EBOH,ROSE ONUOHA & PRINCEWILLEKWUJURU

Bank customers have questionedthe rationale behind the new

policy of the Central Bank of Nigeria(CBN) on categorisation of bankaccounts, saying it is counter-productive with respect to itscashless initiative.The CBN policy categorised bankcustomers into Low Value Accounts

(Level One); Medium ValueAccounts (Level two) and HighValue Accounts (Level three), settingnew deposit limits for each categoryof account holders and introduced athree-tier Know Your Customer(KYC) requirements for banks.

In his reaction, MatthewOgagavworia, a stockbroker said,“We now have a Central Bankleadership that believe the only wayto include the many unbanked is toclassify them as Low Value Accountand limit the maximum single

deposit they can make and also pegthe maximum such people can lodgeinto their Low Value Account.

“Our Governor is not discussingissues of lower interest rates for thewhole economy, nor a destructiveinflation rate or foreign exchangestability that is optimal or the flow ofcredit to sectors of the economy thatcan support tangible economicdevelopment. It is either discussingpolitics or exhibiting crass ineptitudein the policies it initiates to combateconomic problem he is paid for. The

UBA Academy 11: Group Managing Director/CEO, UBA Plc, Mr. Phillips Oduoza, Representative of the Presidentof the Chartered Institute of Bankers of Nigeria (CIBN) Mr. Uche Olowu, officials of UBA Banking School,surrounded by the 3rd batch of Executive Trainees from the UBA Academy Banking School, in a convocationceremony held in Lagos.

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 08/02/2013

118.90 +1.66

95.72 -0.11

141.8 1.5

2,234.00 -4.00

18.17 0.01

DOLLAR 154.74 155.24 155.74POUNDS 43.7464 244.534 245.3216EURO 207.5528 208.2234 208.8941FRANC 168.7275 169.2727 169.8179YEN 1.6727 1.6781 1.6853CFA 0.3006 0.3106 0.3206WAUA 237.0826 237.8486 238.6147RENMINBI 24.8262 24.9069 24.9876RIYA 41.2607 41.394 41.5273KRONA 27.8084 27.8983 27.9881SDR 237.8509 238.6194 239.388

FEBRUARY 11, , , , , 20132013201320132013

other day, it was an additional KnowYour Customer, KYC, requirement,today, its account categorization.”

Mr. Mike Azuka, a customerwith UBA Plc said, “The

account categorization should not bea priority at the moment. The CBNshould think of things that wouldboost production and enhance thewellbeing of the people. A betterpolicy like lowering of interest rate,reduction of inflation, andenhancement of naira should bethings that the monetary authority

Continued on page 18

Cover Story

CMYK

18 — Vanguard, MONDAY, FEBRUARY 11, 2013

Continued from page 17

Continues on page 19

THE Minister of State forEducation, Chief Nyesom

Wike, has said the FederalGovernment will invest intechnical and vocationaleducation to create about onemillion jobs throughcollaboration with educationalinstitutions in Taiwan, SouthKorea and United Kingdom tocreate access to functionalvocational education forNigerian youths. He says thefocus is to use technical andvocational education to createjobs for Nigerian youths

The World Bank advocatesa “three-lens approach” toyouth empowermentinvolving

• Working for youth asbeneficiaries

• Engaging youth aspartners

• Supporting youth as lead-ers.

According to the WorldBank, policymakers shouldframe correct social as well aseconomic policies based onthese “youth lenses.” To bringthis about requires the follow-ing broad initiatives:

Changing the PolicyEnvironment:

The policymakers need toexpand access to and enhancethe quality of education andhealth services. Thepolicymakers need to giveyoung people a voice toarticulate the kind of requiredassistance and theopportunity to participate inthe delivery of assistancepolicies.

Develop Youth Capabilities:To help the young people to

choose the best from theseopportunities, policymakersneed to develop the youth’scapabilities. To do this, thepolicymakers first have to rec-ognise the youth of theircountry as a strategic re-source and vital decision-making agents. They alsoneed to make sure that theyouth are well-informed, suf-ficiently resourced and judi-cious while making their de-cisions.

Provide Second Chances:The policymakers have to

provide the young peoplewith an effective systemwherein they should grantthe youth second chances.For this, they have to imple-ment target programs thatwould provide hope to theyounger people as well as

Youth restiveness andunemployment in Nigeria:The Way Out - Part 5

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provide them incentives topositively reshape their des-tinies.

Increase Investment inYouth:

If done properly,investment in youthespecially during the fivelife transitions of youth willdevelop, safeguard and putin place proper humancapital. As the youthundergo each transitionfrom learning, work, health,family and citizenship,public policies andinvestments in youth candetermine their directionsand can prevent the youthfrom going off-trackespecially when there areeconomic crises and marketsdo not provide sufficienteconomic opportunities.

Create a ProductiveWorking Life:

Once youth obtain the

necessary skills, it is impor-tant to deploy those skills.This should be done byframing policies and imple-menting programs thatwould benefit the rich andpoor so that there is fair andeven competition. Thestates have to realise thatfreeing up their economy toforeign investment not nec-essarily restricts their rolebut in fact increases theirrole in the economic affairs.The policies that open upthe economy will becomeyouth- friendly only if thegovernment is able to directproper resources towardsthe youth and provide themaccess to jobs that are cre-ated due to liberalization ofthe economy.

. . . p o l i c y -makers firsthave to rec-ognise theyouth of theircountry as astrategic re-source andvital deci-sion-makingagents

should be thinking of.At the moment, the

manufacturing sector issuffering for lack of funds;even the funds available tothem are very costly toaccess. It would be better forthe CBN to reduceMonetary Policy Rate(MPR) so that banks canreduce the interest ratecharged on loans.”

According to ElvisMadu, another

customer with a newgeneration bank, the newpolicy shows that CBN isconfused. He said that theCBN is complicatingaccount opening processrather than simplifying it.Madu said that the banksmight capitalise on the newpolicy to introduceunnecessary fees. “With thisnew policy, if a customerwants to upgrade aftergetting to a certain level,the banks might takeadvantage of the situation tointroduce charges whichordinarily the customer didnot anticipate. The CBN hasnot been able to do anythingabout the previous charges,how are we sure that it cando something when thebanks eventually introducecharges in this new policy.”

In his own reaction, Mr.Akonte Ekine, ManagingDirector, Absolute PR, said,“It would be a disaster forthe banking industry if something like that is introduced.The banks say they arelooking for customers andnow they trying to categorise

account holders, this willdefinitely scare depositorsaway from the banks. It willbe a bad sell for banks totry to categorise accounts.”

Also speaking, Mrs.Constance Igboanugo,Executive Director, OrlickCommunications, said,“This would pose dangerfor the banking industry.What is the governmenttrying to achieve with thiskind of measure. Themeasure will rein thebanks, people will begin tokeep their money at home.The CBN recently talkedabout cashless society andnow is trying to categoriseaccounts. It is absurd if Iwould say. What are theytrying to tell Nigerians, notto grow their accounts to alevel, Nigerians willbecome apprehensive tosave in the banks becausenow people will believe thatgovernment wants tomonitor their savings thatwill not help the banks,particularly where thegovernment is talkingabout the banking

Customers flay CBN’s bank accountcategorisation policy

From left: The only female graduate driver Ms Mba Mabel Akwugo, Nigeria’s firstfemale commercial pilot/Rector Nigeria Aviation College Zaria Captain Chinyere Kaluand Group Chief Human Resource Officer, Dangote Group, Mr. Paramjit Pabby, at thegraduation ceremony of the Dangote Graduate Drivers in Zaria, Kaduna State.

industry.”However, many of the

banks who spoke toVanguard on thecategorisation of customersbased on the accountbalance said, the policy is awelcome development as itwill help them to know moreabout the customers they aredealing with. The measurewill not make the bankingpublic to hide their moneyas being speculated rather itwill help them to bring moreof the money to the system.

They further noted thatonce a customer opens anaccount with a bank as alower income earner he orshe does not need to openanother accounts when he orshe graduate to middleincome earner as the systemwill automatically move suchcategory of person to the nextclass based on the balancein his or her account. “Ifpeople decide to keep theirmoney at home it will nothave any benefit to them northe economy. If you keepmoney at home it will losevalue but when it is savedin the bank, interest will bepaid to the owner and themoney will also be lent outto those who need them forproductive purposes thatwill generally engendergrowth and development ofthe country,” an official ofone of the banks said, oncondition of anonymity.

The new policy wasannounced last month by theCBN via a circular to allbanks and other financialinstitutions (OFIs). Thecircular which was signed

With this newpolicy, if acustomer wantsto upgrade aftergetting to acertain level, thebanks mighttake advantageof the situationto introducecharges whichordinarily thecustomer did notanticipate

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Vanguard, MONDAY, FEBRUARY 11, 2013 — 19

Cover StoryContinued from page 18

Nigeria is a country of paradoxes and contradictions.These contradictions are being inflicted on the nation

by politicians in uniform and those in flowing gowns throughhalf- baked policies. Most of these policies, once they favourthe ruling class, become self perpetuating. In the pre-Structural Adjustment Programme (SAP) era, whenNigerians who planned to travel abroad approach their

electronic cards be issuedwith traveller’s cheque.

The question is; what is atraveller’s cheque?

It is a preprinted, fixed-amount cheque designed toallow the person signing itto make an unconditionalpayment to someone else asa result of having paid theissuer for that privilege.They were generally used bypeople instead of cash asmany businesses used toaccept traveller’s cheques ascurrency. If a traveller ’scheque was lost or stolen,they could be replaced bythe issuing financialinstitution. Their use hasbeen in decline since the1990s as alternatives, suchas credit cards, debit cardsand automated tellermachines became morewidely available and wereeasier and more convenientfor travellers.

Traveller’s cheques beforenow were sold by banks andfinancial specialists tocustomers for use at a latertime. Upon obtainingcustody of a purchased

CBN: What has become What has become What has become What has become What has becomeof trof trof trof trof traveller’s caveller’s caveller’s caveller’s caveller’s cheque?heque?heque?heque?heque?

bankers for foreignexchange, they were givensuch monies in traveller ’scheque. There was no directcash sale in foreignexchange.

Then it was not common tosee dollars or pounds incash. It was only from thosereturnees that such foreignexchange in cash was found.

The value of the naira wasstrong and a very goodmeans of storing value. Butwhen SAP was introduced,in the bid for the country toearn foreign exchange thatwas scarce then the CBNallowed exporters to opendomiciliary account, hotelsand restaurant were alsogiven the node to chargeforeign guest in dollars. Inmore recent time the CBNordered banks to payNigerians who arebeneficiaries of fund transferin the denominated foreigncurrency.

Coupled with this is thefact that the CBN shot itselfin the foot with the wrongmonetary policy of cash salesof dollars to Bureaux dechange. Over time, becauseof the heavy depreciation ofthe naira as a result of theintroduction of marketdetermined exchange rate,Nigerians started preferringdollars to naira as theeconomy became awashwith the dollar. This wouldnot have happened if theapex bank had continued toinsist that those who do notuse direct fund transfer,

,

,supply of traveller ’scheques, the purchaserimmediately wrote his or hersignature once upon eachcheque, usually on thecheque’s upper portion. Thishelps to protect them if theyare stolen. The purchaserwill also have received areceipt and some otherdocumentation that shouldbe kept in a safe place otherthan where he or she carriesthe cheques. A traveller ’scheque can usually bereplaced if lost or stolen (ifthe owner still has the receiptissued with the purchase ofthe cheques showing theserial numbers allocated).When wanting to cash atraveller ’s cheque while

making a purchase, thepurchaser was required inthe presence of the payee,to date and countersign thecheque in the indicatedspace, usually on thecheque’s lower portion (if ata restaurant, it may behelpful to ask the waiter towatch and wait for this to bedone.

Applicable change for apurchase transaction wouldbe given in local currency asif the cheque were banknotes. Traveller’s chequesare available in severalcurrencies such as U.S.dollars, Canadian dollars,Pounds sterling, Japaneseyen, Chinese Yuan andEuro; denominations

usually being 20, 50, or 100(x100 for Yen) of whatevercurrency, and are usuallysold in pads of five or tencheques, e.g., 5 x 20 for 100.Traveller’s cheques do notexpire, so unused chequescan be kept by the purchaserto spend at any time in thefuture. The purchaser of asupply of traveller’s chequeseffectively gives an interest-free loan to the issuer, whichis why it is common for banksto sell them “commission-free” to their customers. Thecommission, where it ischarged, is usually 1-2% ofthe total face value sold.

The question is; why hasthe CBN jettisoned the useof traveller ’s cheque infavour of cash sales? TheCBN is where most banksget their traveller’s chequesfrom in the days when theywere in use. Now that inNigeria the dollar hasbecome a second currencythus undermining thesovereignty of Nigeria andthe legal tender status of thelocal currency, the naira,what is the CBN waiting forto reintroduce the use oftraveller ’s cheques in thecountry? Will this not helpits cashless policy? Will thisnot ensure stability in theforeign exchange market ifNigerians do not have directaccess to dollar cash? Willthe value of the naira not beenhanced? Is the cashlesspolicy restricted to the useof naira? CBN please think.

Customers flay CBN’s bank account categorisation policyby the Director, FinancialPolicy and RegulationsDepartment, ChrisChukwu, set maximumsingle deposit amount ofN20,000 and N50,000 forLow and Medium ValueAccounts respectively. Thepolicy also peggedmaximum cumulativebalance for Low ValueAccounts at N200,000 at anypoint in time and amaximum cumulativebalance of N400,000 on theMedium Value Account.However for the High ValueAccount, no limit was placedon cumulative balance.

The circular explainedthat the policy becameexigent after the CBNrecognised that access tobasic banking facilities andother financial services was

necessary in achieving thepolicy on financial inclusion.The CBN in the circularadvised banks to adopt thenew KYC requirement,adding that the proposeddeposit limits was meant toreduce the risk of moneylaundering and financing ofterrorism, noting that theLow Value Accounts aresubject to close monitoringby the financial institutionsand less scrutiny by bankexaminers.

The CBN said the LowValue account can beopened at branches of banksby a prospective customer orthrough banking agents andno amount is required foropening. However, suchaccounts prohibitinternational funds transfer.Furtheremore, the Medium

Value Accounts can beopened face to face at anybranch of a bank by agentsfor enterprises or by theaccount holder, but theaccounts are strictly savingswith no amount required forits opening. Also, wherecross-checking of client’sidentity cards information isnot completed at the point ofaccount opening,withdrawal would bedenied.

The CBN added thatfor the High-ValueAccounts, banks are

required to obtain, verify andmaintain copies of all therequired documents foraccount opening. Accountsare to be opened at the bankbranches by physicalpresence of the prospective

customer and the accountscan be both savings andcurrent. However, for mobilebanking products, theaccount attracts a maximumtransaction limit of N100, 000and daily limit of N1 million.However, such products aresubject to the CBNRegulatory Framework forMobile Payments Services inNigeria.

Banks are required to havea robust, effective andefficient anti-moneylaunder ing /combat ingfinancial terrorism (AML/CFT) solution with screeningtools in place that willmonitor the variousthresholds. “All accounts, nomatter how low thetransaction or the risks, mustbe subjected to continuoussuspicious transactions

monitoring by financialinstitutions which willdetermine when incrementalKYC requirements need tobe provided by thecustomers,” the circular said,adding that the CBN wouldensure the establishment ofappropriate processes andprocedures for the purposeof monitoring compliancewith the regulatoryframework

The circular said that non-compliant financialinstitutions would besanctioned in line with theprovisions of extant laws andregulations. According tothe apex bank, 64.1 per centrepresenting 56.3 millionadult Nigerians do not haveaccess to financial services,hence the policy is designedto bridge the gap.

Now that in Nigeria the dollar hasbecome a second currency thusundermining the sovereignty ofNigeria and the legal tender statusof the local currency, the naira,what is the CBN waiting for toreintroduce the use of traveller’scheques in the country?


Business & Economy

CMYK

BRIEF

BY MICHAEL EBOH

KPMG ProfessionalServices has called on

shareholders and auditcommittee members of publiccompanies to properlyscrutinize the financialstatements of companies,especially under the newInternational FinancialReporting Standards, IFRS,dispensation, to identify weakdisclosures, manipulatedestimates and non-usage offair values, saying these aresignposts of fraudulentfinancial reporting,.

Speaking at the KPMG/Nigeria Shareholders’Solidarity Association’sannual seminar for auditcommittee members in Lagos,Mr. Femi Awotoye, Partner,Audit Services, KPMG, saidunder the IFRS, companiesare required to present theirresults and tell the full storybehind the results.

According to him,manipulated estimates are thebiggest financial fraud thatcan be recorded in an IFRSfinancial statement, notably inareas of loans, provisioning forloans and debtors amongothers.

He said, “Audit committeemembers should ensure thatthey understand all significantestimates; how have estimateshistorically matched up withactual and the extent of the useof models.

“Audit committee membersshould find out if someestimates are recorded asaudit adjustments or not evenrecorded and should seek tounderstand how minor changein assumption can change theresults.”

He further stated that in thenew IFRS dispensation,missing disclosures will beeasy to detect, adding thatweak disclosures as regardfinancial risk managementmay point to fraudulentreporting.

According to him, underIFRS, regulators identifyomitted disclosures as fraudsign. That is, there issomething to hide.

Awotoye urged shareholdersand audit committee membersto ensure an internalcoherence between thedifferent components thatmake up the annual report andalso evaluate processes usedto obtain information,ensuring that sufficientdisclosures are made.

He further advised that themember of the audit committeeensure that a link is formed

Financial misstatement: KPMG cautions onweak disclosure, manipulated estimates

from old to new and thatdisclosed changes aregenerally understandable.

He said big ticket itemsaffected in the account shouldbe determined, while theimpact of the changes onexpectations by stakeholdersshould also be evaluated.

He advised audit committeemembers on the need toevaluate the impact of IFRSadoption on key performanceindicators and drivemanagement to manageexpectations where

significant changes occur andalso evaluate the extent towhich incentives mayencourage fraudulentfinancial reporting.

He said, “Audit committeemembers should receiverelevant training on IFRS toensure sufficient level ofknowledge for dischargingduties and keep knowledgecurrent.

“Having a profoundknowledge of the business isa key element ofunderstanding and

interpreting IFRS financialstatements. Understand thestory behind the financialperformance your companiesare reporting.

“IFRS involves judgement.Audit committees shouldunderstand areas involvingestimates and their effect onreporting results.

“Audit committee membersmust ask probing questionsand have frank discussionswith management andauditors.”

By EMEKA AGINAM

Microsoft, the globalsoftware giant has announcedplans to commit about N12billion to the African marketas part of its initiative to helpimprove the continent’sglobal competitiveness.

The plan was announced atthe launch of the Microsoft4Africa initiative Tuesday inLagos. The event also followsthe introduction of Huaweilow-cost Windows Phone 8device in seven Africanmarkets including Nigeria .

The phone will initially beavailable in Angola, Egypt,Ivory Coast, Kenya, Morocco,Nigeria and South Africalater this month.

The low-cost WindowsPhone 8 device powered byMicrosoft is expected to drivesmartphone penetration onthe continent.

The launch forms part of

Microsoft commits N12b to help AfricaMicrosoft commits N12b to help AfricaMicrosoft commits N12b to help AfricaMicrosoft commits N12b to help AfricaMicrosoft commits N12b to help Africain global competitivenessin global competitivenessin global competitivenessin global competitivenessin global competitiveness

Microsoft’s wider 4Afrikainitiative, a new effort throughwhich the company willactively engage in Africa’seconomic development toimprove its globalcompetitiveness.

As a first critical step towardincreasing the adoption ofsmart devices, Microsoft andHuawei introduced theHuawei 4Afrika , a fullfunctionality Windows Phone8 which will come pre-loadedwith select applicationsdesigned for Africa.

The Huawei 4Afrika phone,which is the first in what willbe a series of smart devicesdesigned “4Afrika,” will betargeted toward universitystudents, developers andfirst-time smart phone usersto ensure they have affordableaccess to best-in-classtechnology to enable them toconnect, collaborate, andaccess markets andopportunities online.

By 2016, the Microsoft4Afrika Initiative plans tohelp place tens of millions ofsmart devices in the hands ofAfrican youth, bring 1 millionAfrican small and mediumenterprises (SMEs) online,up-skill 100,000 members ofAfrica’s existing workforce,and help an additional100,000 recent graduatesdevelop skills foremployability, 75 percent ofwhich Microsoft will helpplace in jobs.

Speaking to IT Journalistsduring the introduction of theinitiative, Onyeje, GeneralManager, Microsoft Nigeriasaid with optimism that thecapacity building projectwould help youths to beglobally competitive.

“It is a model for jobcreation. It is all about makingAfrica globally competitive.We want to create skills. Wewant to create innovation.

From left: Chief Commercial Officer, Etisalat Nigeria, Mr. Wael Ammar; Winner of EtisalatPrize for Innovation 2012 (Most Innovative Product/Service), Mr. Olaseni Odebiyi and ChiefExecutive Officer, Etisalat Nigeria, Mr. Steven Evans, at the 2013 Etisalat Prize for InnovativePress Conference, held at Four Point By Sheraton, Victoria Island, Lagos,

Total set to getTanzania oil,gas explorationlicenses

Tanzania is set toaward exploration

permits to Total SA,Europe’s third-largestcrude producer, to searchfor oil and gas in the EastAfrican country, Energyand Minerals MinisterSospeter Muhongo said.The company, based inParis, “has approachedus and we are going toissue licenses to Total” toexplore in LakeTanganyika, on theborder with DemocraticRepublic of Congo,Muhongo said in aninterview yesterday inCape Town. The permitswill be issued in the“next few months,” hesaid.

BG Group Plc, a U.K.explorer, and Statoil ASA,Norway’s biggest energycompany, are amongcompanies searching forgas in Tanzania, wherean estimated 33 trillioncubic feet of the fuel hasalready been found.Along with neighboringMozambique, whereexplorers made thebiggest discovery of thedecade, more than 100trillion cubic feet ofreserves have been found,enough to meet globaldemand for a year.Tanzania plans to createa sovereign wealth fundthat will use growing oiland gas revenue tofinance developmentprojects in East Africa’ssecond-biggest economy,Muhongo said. The fundmay also invest incompany shares toaccumulate wealth, hesaid.

“We should have a fundwhose accessibility issomehow very restrictiveand the utilization of theresources are for goodintentions,” Muhongosaid. The government has“just” completed a seconddraft of a policy documentfor the gas industry that’saimed at improvingrevenue management,Muhongo said. Afterfeedback from the generalpublic and companies hasbeen incorporated,parliament is expected tovote on the policy, whichhasn’t been updatedsince 1980, before theend of the year, he said.

CMYK

BRIEF


Business & Economy

By GODFREY BIVBERE

Operators in the maritimeindustry are divided

over the planned concessionof all marine operationspresently the only functioncarried out by the NigerianPorts Authority (NPA).Meanwhile the Senior StaffAssociation of Nigerian PortsAuthority has kicked againstthe concession plan of theBureau of Public Enterprises(BPE).

Senior Special Adviser tothe President on Maritimematters, Leke Oyewole, toldVanguard that he does nothave details of the plannedconcession but stressed thatif the plan is in the interest ofthe nation then it should bedone.

He said if it will improve thefortunes of the maritimeindustry, it should beconcessioned.

However, the NationalPresident of the Associationof Nigeria Licensed CustomsAgents (ANLCA), PrinceOlayiwola Shittu, who wasapparently angered by theidea, said “they shouldconcession our lives. They arenot working at it whether theone they did before isworking.”

Shittu noted that the planis an avenue for politicians tohelp themselves. Heexplained that indigenousship owners who aresupposed to be helped havebeen abandoned, same thingwith the issue of Cabotagewhich is still ineffective yearsafter it was passed into law.

On his part, President ofthe Senior Staff Association,

BY GODFREY BIVBERE& EDIRI EJOH

Group Chief ExecutiveOfficer of the AP

Moller-Maersk Group, Mr.Nils Andersen, last weekperformed thegroundbreaking ceremonyfor the N20.9 billion ($135million) terminal yardredevelopment andexpansion of the largestcontainer terminal in WestAfrica, the APM TerminalsApapa.

The project, which is thePhase 3 of the modernizationand upgrading of the APMTerminals, includes terminalyard redevelopment andexpansion including newstaff amenities and customerservice building, acquisitionof container handlingequipment, implementationof new terminal operatingsystems and a new Customs

APM Terminal flags off $135m final developmentphase for Apapa Terminals

container inspection facility.He stated that the project

will include development ofnew container stacking areassuch as the old Sunshine Oiland Dangote Cement areas,which were part of the originalApapa concession but nothanded over to APMTerminals until recently.

“The project will alsoconvert the terminal to fullRTG (yard crane) operations,and includes purchase ofmany items of containerhandling equipment, a newcustomer service building,new employee amenitiesbuildings as well as office forNigeria Customs, and a newCustoms container inspectionarea. The project will alsoinclude state of the art terminalcontrol systems including asatellite based containerpositioning system,” he said.

Andersen disclosed that theinvestment has become

necessary in order to ensurethere is sufficient portcapacity for containeroperations in Lagos “at leastuntil 2017.”

He said the project willentail US$135 million ofinvestment bringing the totalcapital investment since thestart of the concession in 2006to a total of US$330 million.

The APM Moller-MaerskCEO stated that the freshinvestment will “make theApapa Terminal the largestand most modern terminal inWest Africa with a capacityof 1.2 million TEU per year.

“It will benefit the peopleworking in the terminal, whowill have better, saferconditions, it will be good forthe environment, becausepollution will be reduced,and it will further enableNigerian business to importand export goods andproducts.

“Apapa has already foryears promoted trade anddevelopment and attractedcustomers, making it thebusiest terminal in WestAfrica. This is anotherimportant step in this excitingjourney.

“Many efficiency measuresand modernisations have beencarried through in recentyears, lifting the productivityand developing safety andtransparency, so much so thatwe use it as a best-practiceexample for terminals in othergrowth markets. We hope andbelieve that Apapa willcontinue to be a terminal wecan all be proud of,”Andersen stated.

The AP Moller-Maersk bosssaid the expansion shows thatthe Nigerian economy is stillgrowing and has potential formore growth, he concluded

Operators differ on Marine Service Concession

Comrade Umar OmeizaJimoh, said the decision ofBPE, which wascommunicated via a letteraddressed to the ManagingDirector of NPA and datedJanaury 18, 2013, has nolegal backing and it wouldamount to re-concessioning ofalready concessioned servicesunder public privatepartnership.

According to Umar, “themove by BPE to snatchmarine/harbour ancillaryservices from NPA has nolegal backing and the portactivities enable NPA toinvolve PPP in all her service.

BPE should remember thatthe terminals concesioned(PPP) by BPE, NPA and othergovernment agencies wasdone under the Port Act of1999. Based on the abovepremise, we believe BPE issuffering from reactivedeclining syndrome.”

He noted that NPA ishealthy and is carrying outall these services beneficiallyfor the nation and there is noneed for BPE to plan for theconcessioning of the services.He advised BPE to stay offNPA and beam its searchlight on areas it has notperformed better.

“NPA is healthy and we areon top of maritime business.BPE should flash its searchlight on areas it has notperformed well like NigerianTelecommunications Limited(NITEL), Power HoldingCompany of Nigeria (PHCN)etc and should leave NPAalone.” He described BPE asfronting agent for some cabalin the government.

To the labour leader, theconcession exercise, if carriedout, would lead to securitythreat, loss of governmentrevenue and high cost ofservices, mass sack anddenial of common userfacilities in the ports.

L-R: Mr Jean-Pierre Breton, Finance Director; Mrs Chinwe Udo-Daris, Human ResourcesDirector; Mrs Anne Ezeh, Communications Manager; and Mr Marcel Hochet, Country President;all of Schneider Electric Nigeria at the First Nationwide Company Meeting held in Lagos.

Einhorn suesApple, marksbiggest investorchallenge inyears

Apple Inc last weekThursday confronted

its first major challengefrom an activistshareholder in years ashedge fund managerDavid Einhorn’sGreenlight Capital filedsuit against the companyand demanded it dole outa bigger piece of its $137billion cash pile toinvestors. The unusualmove comes as the world’slargest technologycompany grapples with atumbling share price,mounting competition inthe smartphone and tabletmarkets and concernsabout its ability to producenew breakthroughproducts.

Einhorn, a well-knownshort-seller and Applegadget fan, said in aninterview with CNBC thatthe company harbored a“ D e p r e s s i o n - e r a ”mentality that led it tohoard cash and investonly in the safest, lowest-yielding securities.

Apple nearly went brokein the 1990s before SteveJobs returned andengineered a sensationalturnaround, with productssuch as the iPhone andiPad that became must-haves for consumersaround the world. Thecompany ’s near-deathexperience has led Appleto be exceptionallyconservative with its cash.Last March, just monthsafter Jobs’ death, Appleresponded to a barrage ofinvestor criticism over itslarge cash hoard byinitiating a quarterly cashdividend and a sharebuyback that would payout $45 billion over threeyears. At the time, Applewas sitting on $98 billionin cash.

Einhorn’s lawsuit filedin U.S. District Court inManhattan targets aproposal by Apple toeliminate from its charter“blank check” preferredstock. The board now hasdiscretion to issuepreferred stock but isasking shareholders at itsannual meeting onFebruary 27 to vote on aproposal that would firstrequire shareholder


CMYK

Banking & Finance

BRIEF

Senator Pat Toomey, of the United states of America representing Philedepia; Tayo-BalogunJnr Executive Director, E- marketing solutions, Daniel Thompson, Marketing Consultant, Spot-links Media Communications at the second annual Pennsylvania society reception of the leagueof 1789 for professionals and emerging leaders held in New York.

BY PETER EGWUATU

The Central Bank ofNigeria (CBN),

weekend, said theFederal Government hasapproved new fiscalpolicy measures for thecountry with effect fromJanuary 1, 2013.

In a circular released bythe CBN and signed byDirector Trade andExchange Department ,W.D Gotring, the affectedproducts include : Sugar,Rice , Aircraft , Solidminerals, Public masstransit, Polymers ofPolyethylene andPolypropylene andAmorphous Pet Chips.

According to the CBN,For SUGAR : Machineryand Spare parts importedfor the establishment oflocal sugarmanufacturing industriesshall attract Zero per centduty. Sugar cane toSugar value chaininvestors shall enjoy a 5year tax holiday; Rawsugar (H.S Codes1 7 0 1 . 1 1 0 0 . 0 0 -1701.1200.00 ) shallattract an import dutyrate of 10 per cent pluslevy of 50 per cent whilerefined sugar (H.S Codes1701.9110.0-1701.9990.0)shall attract an importduty rate of 20 per centplus a levy of 60 per cent.

For RICE: HuskedBrown Rice (HS Code1006.2000.00) , semi -milled or wholly milledrice , whether or notpolished or Glazed (H.SCode 1006.3010.00) shallattract an import dutyrate of 10 per cent plus alevy of 100 per cent.

For Air craft: Allcommercial Aircraft spaceparts imported for use inNigeria shall attractimport duty rate of zeroper cent and zero per centimport VAT.

For Solid Minerals :Machinery andEquipment imported forthe development of thesolid minerals sector shallattract an import dutyrate of zero per cent andzero per cent import VAT.

For Public Mass Transit:Import duty rate onCompletely KnockedDown (CKD) componentsfor Mass Transit Buses ofat least 40 -sector capacityhave been reduced from5 per cent to zero Per centto encourage theproduction of mass transitvehicles in Nigeria

By PETER EGWUATU

Stanbic IBTC Holding hasdisclosed that its forth

coming West Africa Investors’Conference will provideopportunity for both foreignand local investors to investmore in Nigeria.

The Managing Director,Stanbic IBTC Holding Plc,Mrs. Sola David-Borha, whodisclosed this at the weekendin Lagos, said that theconference is the 4th of itskind for the Standard BankGroup.

According to her, “ It is amilestone in investors’conferences as itdemonstrates the importancethat Stanbic IBTC andStandard Bank Group attach

Stanbic IBTC conference to provide opportunity forinvestors to invest — David Borha

to it as this will help to linkup investors with variousbusinesses in Nigeria . It willenable them identifyopportunity that they caninvest in both equities anddebt instruments. We are veryhappy to host the conference.

In his own remark, theChief Executive Officer,Stanbic IBTC Stockbrokers,Mr. Oladele George Sotubo,said, the conference will be afour day event. It will startfrom 18th of February to 21st

of February 2013. We willstart the conference in Accra,Ghana. To open theconference in Ghana will bethe finance Minister ofGhana. From 19th of Februarythe conference will move toLagos, Nigeria and the venueis at Federal Palace Hotel,Victoria Island.”

Commenting on thedignitaries expected at theconference, Sotubo said, “Weexpect both regulators andoperators in the financialsector and they will rob mindstogether on issues that affectthe economy and capital andmoney markets. Companiesthat are listed and thoseseeking quotation on theNigerian Stock Exchange(NSE) are expected to bethere. This will give themopportunity to have one onone meeting and discussion.Christpher Kolade will beaddressing investors at acocktail and at the dinner weshall be having ourChairman, Atedo Peterside.He will be telling investors onwhat the Federal Governmenthas for the country as it affectsthe power sector. The forum

will provide opportunity toforeign investors to knowmore about their investmentand where the market is atpresent and would likely bein years to come.”

The theme of theconference, he stated is “TheWest African market enablingthe next level”. We want to getmore of the retail investors toget them participate or investin the FGN Bond. We haveprovided platform forbondholder to enter and exit.Our position as a StandardBank Group is that anyinvestor can have opportunityto invest in any market of itschoice, even Ghana economyis opening up and investorsneed to know about it. We arein Ghana and othercountries” he noted.

FG approvesfiscal policymeasures for2013

CreditRCreditRCreditRCreditRCreditRegisegisegisegisegistrtrtrtrtry intry intry intry intry introduces 1oduces 1oduces 1oduces 1oduces 1ssssstttttcredit bureau scores in Nigeriacredit bureau scores in Nigeriacredit bureau scores in Nigeriacredit bureau scores in Nigeriacredit bureau scores in Nigeria

BY BABAJIDE KOMOLAFE

CR Services (CreditBureau) Plc has

announced the introduction ofthe CreditRegistrySMARTScore, Nigeria’s firstcredit bureau score. For thefirst time a statistically-basedcredit score has beendeveloped exclusively forNigeria and is as a result ofseveral years of evaluation,development andcommitment from oursubscribers to improve dataquality.

The use of statisticalmethods to help managemultiple decisions iscommonly known as scoring.Scoring is based on the useof mathematical models topredict the odds of futureresults. Credit scores are usedto help predict the creditbehavior of customers anddetermine thecreditworthiness orprobability of not defaulting.Scoring systems have beenaround for decades to enablebankers, insuranceunderwriters, serviceproviders, retailers and manyother institutions to makeinstant approval or rejectiondecisions.

Credit scores aredetermined by a variety ofcharacteristics such aspayment history, outstandingdebt, type of credit exposure,new credit enquiries, numberof delinquencies, etc. Scoringsystems are designed on asimple premise that pastbehavior predicts futurebehavior. Hence, credit scoresare not the only decidingfactor in making lendingdecisions and in fact creditorscan decide to override a scorebased on relevant informationnot considered by the scoringsystem. Overall, in

developed economies, creditscores are the norm andcreditors use such techniquesto instantly evaluatecustomers for productofferings thus enabling fasteasy access to credit toimprove standard of livingand stimulate economicgrowth.

Chief Executive Officer,CR Services, Mr. Taiwo

Ayedun, he says “With theintroduction of credit scoresto the Nigerian financialindustry, banks can nowintegrate this world-class

instrument into their riskarchitecture whether formonitoring risk, segmentingor evaluating new applicantsfor credit. With theintroduction of SMARTScore,organizations can improverisk management, reduce loanprocessing time and markettheir products much moreeffectively. Overall,SMARTScore enablescreditors to identify risk in astandard and concise manneracross all loan portfolios.”

CR Services (CreditBureau) Plc is Nigeria’spioneer and leading credit

bureau company. Today, CRServices is trusted withNigeria’s largest creditinformation database of over12 million borrowers(Individual and Corporate)which includes credit andprofile information fromdeposit money banks, primarymortgage institutions,microfinance banks, financehouses, leasing companies,development financei n s t i t u t i o n s ,t e l e c o m m u n i c a t i o ncompanies and other serviceproviders.

CMYK


Coporat e Finance

VVVVValue of alue of alue of alue of alue of Equities Equities Equities Equities Equities appreciatappreciatappreciatappreciatappreciates bes bes bes bes by y y y y N267bn N267bn N267bn N267bn N267bnBy CHINEDU IBEABUCHI

Equities listed on theNigerian Stock Exchange

last week maintained upwardtrend, as total marketcapitalisation appreciated byN267.43 billion.Specifically, the marketcapitalisation opened atN10.37 trillion, rising by 2.78

per cent to close at N10.65trillion. Also, another marketindicator, the All-Share Indexrose by 2.78 per cent or901.63 points to close at33,313.49 points from32,411.86 points.Between January 1st andclose of trading last week,market capitalisation hasrisen by N1.69 trillion while

the All share Index has risenby 5234.68 points.

Analysts at ProshareInvestment Companyattributed the impressiveperformance in the market toanticipation of corporateresults, but warned thatprofit-taking might checkprogress in coming weeks.

A review of last week’sactivities showedthat equitiesextended itsuptrend onMonday by 0.84 percent to open theweek on positivenote as investorsremained optimistic.

Also, the keybenchmark indicesclimbed further onTuesday andWednesday asprices rose by 1.16per cent and 1.20per cent gainrespectively.

However, marketdeclined by 0.72 percent on Thursdaydue to sell pressureby investorsscrambling for profittowards last minuteof the session onthe back ofi n c r e a s e dspeculative trading.

Subsequent ly,equities sustainedhealthy breadth onFriday as markettraded above theline despiteincreased volatilityto end the weekwith aggregate

gain of 2.78 per cent.

Seventy-one equitiesrecorded price

appreciation compared withfifty-three equities thatrecorded appreciations lastweek. These were led byWema Bank plc, whichappreciated by 59.78 per centto close at N1.47 per sharefrom N0.92 per share. It wasfollowed by Royal exchangeAssurance Plc with a gain of52.46 per cent to close atN0.93 per share. While Aiicoinsurance Plc rose by 45.24per cent to close at N1.22 pershare, among others.

On the contrary, John HoltNigeria Plc recorded thehighest price loss,depreciating by 13.58 percent to close at N1.40 pershare. This was followed byEterna Oil Plc, whichdeclined by 9.94 per cent toclose at N4.17 per share.While MCNICHOLS NigeriaPlc lost 7.41 per cent to close

at N0.75 per share, amongothers.

During the week 3.572billion shares valued atN24.692 billion in 39,321 dealswere trade in contrast to a totalof 2.813 billion shares valuedat N22.188 billion traded in33,123 deals penultimateweek..

The Financial Services sectorsustained its dominance as themost active during the week,contributing 70.75 per cent,66.16 per cent, 58.71 per centto the total equity turnovervolume, value and number oftrades respectively in 2.527billion shares valued atN16.338 billion exchangedhands by investors in 23,085deals.

In addition, 1,670 units ofFGN bonds valued at N2.087million were traded duringthe week in 41 deals. However,there were no transactions inthe State/Local GovernmentBonds and Corporate Bonds/Debentures sectors.

Shares of consumer goods'companies are overpriced-Rewane

by market makers.Rewane noted that doubts

about the true impact of themarket makers were beingraised following the ‘elementof pumping and dumping’being experienced in themarket already.

He, however, assured thatalthough there are echoes ofasset bubble, but the marketwas far from one

He further stated that manystocks are trading at fair valueor above fair value as investorsadd to their portfolio inanticipation of release of 2012full year financial results ofcompanies, as well as those offirst quarter of 2013.

He said though the stockmarket had witnessed thehighest bullish run in themonth of January, the first ineight years, he affirmed that adisappointing earning seasonmay dampen the positive trendbeing recorded, while adding,“We expect a few misses whenthe earning season starts.”

“The index return of 13.44percent is one of the best inthe history of the exchange asthe All Share Index, ASI,reaches its highest point sinceDecember 2008. Current run isbacked by fundamentals andglobal fund flow to equitiesand emerging markets,” hestated.

NKIRUKA NNOROM

Managing Director,Financial Derivative

Company, FDC. Mr. BismarkRewane has warned that theshares of companies in theconsumer goods sector of the

Nigerian Stock Exchange(NSE) are showing signsof overpricing.

He gave this warning inthe February edition of hismonthly Economic Newsand Review adding thatfuture earnings of manyconsumer goods companycan no longer supporttheir share prices.

Rewane also called forclose monitoring of theactivities of market makersto avoid a build of bubblein the capital market.

It would be recalled thatthe NSE said that closemonitoring of activities ofmarket makers in relationto performance of theircore mandate would notcommence until thecompletion of the roll outperiod, expected to lastfor six months.

The roll out period,which is already in itssixth month, has seen theNSE including 43different stocks in the listof stocks being managed


CMYK

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CMYK

26 —Vanguard, MONDAY, FEBRUARY 11, 2013

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28— Vanguard, MONDAY, FEBRUARY 11, 2013

Interview

,

,There is a steady, stablestream of income coming fromthe mortgage sector, becausethere is nothing you can getwrong in bricks and mortar

The morThe morThe morThe morThe mortgage secttgage secttgage secttgage secttgage sector is theor is theor is theor is theor is thefuture of Nigeria’s economyfuture of Nigeria’s economyfuture of Nigeria’s economyfuture of Nigeria’s economyfuture of Nigeria’s economy— MBAN President

Mr. Abimbola Olayinka,Managing Director/

CEO of Resort Savings andLoans (RSL) Plc, andPresident of MortgageBanking Association ofNigeria (MBAN), in thisinterview spoke on reformsof the mortgage sector,plans by RSL to recapitaliseand the proposed LiquidityFacility Company beingspearheaded by MBAN todeepen the mortgage sector.Excerpts. Journey of RSL so farWe have come a long way.By the end of this year, wewill be twenty years old.Resort has been able to growfrom one single branch toabout 13 offices nationwide.We have 5 offices in Lagos,2 in Abuja, 1 in Jalingo, 1 inYola, 1 in Ekiti and 1 in PortHarcourt and 1 in Abeokuta,making 13 branches in all.All our branches arenetworked and we arerunning 24/7, our systemsare seamless and onlinereal-time.

We have also effectivelydeployed our debit cardsystem, and interfaceeffectively into the e-payment platform and withour debit card, you can makewithdrawals through ATMson any bank’s ATMnationwide, including ours.We have grown our depositbase to N2 billion and thatis going to grow heavily thisyear. As of last year, ouraudited third quarter resultwhich we sent to the StockExchange was in excess ofN100 million profit beforetax.

By next month, subject tothe approval of theregulatory authorities wewould be coming out with anoffer. We are going to raiseabout N3.5 billion in form ofboth rights issue and publicoffer, although this is subjectto regulatory approval. Sowhen they give the greenlight we will go aheadbecause it is regulatoryauthority induced, based onthe new CBN guideline thatfor you to be a Nationalmortgage bank, you musthave a capital base of N5billion. We intend to beamong the first fivemortgage banks in thecountry. Currently we areamong the first ten.

Extension of deadline forPMB recapitalisationWe’ve been on this for thepast 2, 3 years, so they’vegiven the mortgage sectorenough time for us to knowwhat to do. And a lot of mycolleagues are either goingthrough mergers right nowto meet up with therequirement with those whohave scaled through. Somewill like to stay as a statemortgage bank which is atN2.5 billion. So I strongly

By YINKA KOLAWOLE

believe that between Marchand April, we will have thesesorted out. So we will nottalk about extension, it’s adone deal and we need tobe well capitalised to movethe sector forward. All thingsbeing equal, at the end ofthe day, we’ll probably justhave maybe about 25mortgage banks from thecurrent number in excess of70.

NHF disbursement byResort SavingsFor us, in terms ofdisbursement, totaldisbursement from FMBNis in excess of N800 millionas at the last count. Andwhen you talk of totalnumber of people that havebenefited from the schemethrough us, I’d say it’sgoing to be in excess of 400people so far. But in termsof processing, we have inexcess of 3,000 that we arecurrently processing withFMBN, which if we aregoing to put together it willmeasure up to about N8billion, that is in terms of theprocessing that are in theirsystem already, but the onesthat have got disbursed areN800 million.

Importance of themortgage sector to theeconomyThe mortgage sector is thefuture, whether we like it ornot, it’s the future. It’s justthat we have a lopsidedpolicy in place here. Outthere in Europe and the US,mortgage banks are thebiggest banks. It’s just outhere that the reverse is thecase. Because everybodyneeds a roof over their headand mortgages are the in-thing over there. We alsohave some negative culturalbeliefs here. But all thoseare being changed rightnow. The mortgage sector isa place to invest in. It’s along-term investment but Ican guarantee you that thereis a steady, stable stream ofincome coming from themortgage sector, becausethere is nothing you can getwrong in bricks and mortar.Once the house is there,even if the houses are notbeing lived in by you, youcan rent it out. There will bea stream of income.

Nigerian MortgageCompany (NMC) andinterest ratesThe mortgage sector has

some peculiar problems.One of them is long termfunds, another one isliquidity, interest rate,foreclosure laws, land useact, so many. But we in themortgage sector decided thatlet’s take one and deal withit. What is the key problemand one of the majorproblems is liquidity. If Ihave N5 billion and bookmortgages of N5 million, ifI give out 1000 mortgages,N5 billion is gone. Andwhen I spend everything onmortgage, what happensafter that?

So, we said that liquidityis the key thing, we need tocreate a vehicle which aftercreating a primarymortgage, we can nowoffload those mortgages ontothat vehicle and the vehiclewill create liquidity, injectfunds back by buying themortgages off me and then

they can now pull themortgages back together interms of mortgage-backedsecurities or mortgagebonds and offer it to thecapital market so investorscan also invest in it. That isthe primary aim of thatcompany, to create liquidity.We are collaborating withIFC, World Bank, FederalMinistry of Finance, andCentral Bank of Nigeria(CBN). The initiative camefrom MBAN and that vehicleshould become operationalby the third quarter of thisyear. Initially, the statutoryplan is to start with about 20billion and then it will grow.It’s going to be far more thanthat, on a yearly basis it willgrow.

Mortgage contribution toGDPOur focus is that within thenext five years, we should

be able to contribute about5 percent to GDP and if allthese things we are talkingabout are put in place, thefocus will change. If we canachieve 5 percent of GDP,we have gone a long way.And the impact of this willreflect on the economy,because the value of thingswill change.

Can higher capitalisationhelp the mortgage sector?When you are bettercapitalised, it helps in yourbusiness and then you havecapacity to absorb shock,because we are in thebanking system, and therewill always be shocks. Let’slook at it, the CBNcapitalisation plan,technically what is N5billion, divide it by 150, thatis just about $32 million,when the banks are inbillions. It’s just thebeginning. So ultimately inthe next few years, I thinkthe focus will shift towardsthe mortgage sector. That’swhere to invest in.

On interest NHF rate, anyhidden charges?The rate is six percent. Weborrow from FMBN on yourbehalf at four percent. Wecarry all the risks, so theonly spread we have is twopercent and even that twopercent does not even exist.Out of that two percent, Imake one percent provisionon all risk assets. Statutorily,I pay about 0.5 percent toNDIC as premium, sowhere is the spread really.Basically, you don’t havemore than 0.5 or one percent, so mortgage banks areallowed to charge someprocessing fees inprocessing the NHF. Theinterest rate is fixed, it’s sixpercent and the processingfee is a one-off fee, you don’tkeep charging it.

Safety of raising fundsfrom capital marketRight now, I believeconfidence has beenrestored to the capitalmarket. We all lost moneythree years ago, everybodyhas moved on. There hasbeen capital appreciation inthe market, on the averagenow we would be having anexcess of 20 per cent. It’sbeen growing everyday andI don’t see it coming downagain because now thestocks are properly priced.The worst case is over forthe market, it’s just for us tosee the boom. Also, we byvirtue of being a PLC, weneeded to get a clearance atour AGM. We had our AGMin November and ourshareholders gave us thego ahead. So we alreadyhave in excess of 12,000shareholders and they’vegiven us the nod and we aregoing ahead. So people arealready prepared to fundthe rights issue and thepublic offer.

•Abimbola Olayinka, MD RSL & MBAN President


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Housing & Homes Finance

BRIEFS

Some experts in the builtenvironment have called

for the pooling of idle fundsin the nation’s economy toprovide low interest mortgagefinancing, as a possible wayof enhancing homeownershipin Nigeria and thus reducingthe huge housing deficit inthe country.

They posit that such is not anew consent as it is practisedglobally where idle publicfunds are used to financeconstruction of government-subsidised housing. Theylamented that mortgagefinancing is yet to have anysignificant impact in thecountry, arguing that thesector is a potential nationalincome earner.

Speaking at the recentinaugural members’ dinnerand cocktail night of theInternational Real EstateFederation (FIABCI), Mr. JoeIdudu, a past president ofNigerian Institution of EstateSurveyors and Valuers(NIESV), noted that currently,mortgage finance contributedless than 1 percent of GDP inNigeria, which contrastssharply with what obtains insome emerging markets.

He specifically declared thatidle funds such as unclaimeddividends are needed toaddress the appalling state ofmortgage finance in thecountry. “The major problemof mortgage today is that it istoo expensive to manage asinterest rates are very high.What we need is seed moneysuch as idle funds likeunclaimed dividends to serveas buffers to bring down therates,” he said.

Idudu remarked that all

Mortgage financing: ExperExperExperExperExpertststststsadvocate use of idle fundsadvocate use of idle fundsadvocate use of idle fundsadvocate use of idle fundsadvocate use of idle funds

efforts by government toreform the mortgage sectorhas been largely unsuccessfulbecause there are not enoughfunds being injected into thesector to assist in driving it.He recalled that somemeasures introduced by theCentral Bank of Nigeria(CBN) in 2006 in order togalvanise the sector over aperiod of five years couldachieve the desired resultsbecause of paucity of fundsavailable to operators in thesector.

In the same vein, mortgagebanks operators and estatedevelopers have beencourting the federalgovernment to encourage theinvestment of a chunk of the

pension funds running intoabout N3 trillion in themortgage sector. ManagingDirector of Sun Trust Savingsand Loans Limited, Mr.Mohammed Jibrin, noted thatbeing a long-term funds, thepension funds is best suitedfor investment in themortgage sector which is alsolong-term in nature. “ThePension Reform Act, 2004, hasmade it possible for people tohave a contributory pensionscheme in place. The pensionindustry has an estimatedN2.4 trillion of pension fundsunder management. Theseare mostly long-term fundsand are the most qualified tosupport the mortgageindustry in attaining its

millennium developmentgoals. But these funds,understandably, are mostlylocked up in governmenttreasury bills and bonds.

“These (pension) fundshave to be unlocked and madeavailable for the real estatesector. This is because thefunds are basically, as Ipointed out, long-term andyou may not have the problemwe experience today in termsof mismatch in the maturityprofile of the loans we grant,because mortgage loans arelong term as against thedeposits we take that aremostly short-tenured. If you doan actuarial valuation of thepension funds managed bythe PFAs (Pension FundAdministrators), the minimumaverage number of years themoney will remain with thePFAs is about 20 years. Thisis what we call long termmoney. This is the type ofmoney you expect should gointo the housing and mortgagesector,” he stated.

Jibrin asserted thatmortgage bank operators havebeen in constant dialoguewith key functionaries ingovernment on thedevelopment. “There havebeen varied meetings andposition papers to this effect.Minister of Housing andUrban Development, Ms. AmaPepple has been holdingstakeholder meetings with thesector. She has set upcommittees, and the FederalMortgage Bank has beenproviding the necessarysupport to this effect. I amaware that the Minister ofFinance and the Coordinatorof the Economy, Dr. NgoziOkonjo-Iweala, is committedto and looking at the housingsector as a catalyst for growthand employment generation.I know that the Housing andFinance ministers have beenworking together to ensurethat the housing sector isjump-started seriously thisyear. It is on top of their radar.

Dubai has long been theregional hub for the oil-

rich Gulf States, but theambitious city state is neverone to rest on its laurels. Theemirate has for years beentouting itself as the centralnode for 2 billion people,spanning the Middle East,the subcontinent, central Asiaand eastern Africa. Now, evenWest Africa, an eight-hourflight away, is on its radar.

Paris and London have longbeen the hub for westernAfrican states, but Dubai isnow giving these establishedcentres a run for their money.Emirates airline’s Dubai-Lagos flight is renowned forconstantly beingpacked. Some banks, such asStandard Chartered, havechosen to cover some businesslines in sub-Saharan Africafrom its regional headquarters

Nigerians among top Dubai property investorsat Dubai’s financial centre.

Luring talent to thecomfortable Dubai lifestyle iseasier than some Africanpostings, while reachingvarious outposts of thecontinent can be easier fromthe city’s thriving airport thanother hubs, such asJohannesburg andNairobi. As Chinese andAsian firms chose Dubai fortheir regional headquarters,often these businesses are notonly targeting the Gulf, butlooking to use the city as alaunch-pad into sub-SaharanAfrica as well. And theinvestment flows are goingboth ways.

According to the FinancialTimes, an Abu Dhabi basednewspaperThe National,reports that Nigerians areflooding Dubai’s propertymarket, especially as it starts

to show signs of recovery afterfour years in the doldrums. Itisn’t exactly a new trend. Evenat the property market’s nadir,after the real estate crashwiped more than 50 per centoff average valuations in theautumn of 2008, Nigerianswere known as likely buyers.One real estate agent said atthe time that Nigerians werethe only nationality buyingproperties as the market wentinto free fall.

And the Nigeria-Dubaiproperty love-in is still goingstrong as the property marketin general improves. JonesLang LaSalle in a recentsecond-quarter report notedthat villa prices in Dubai hadrisen by around 20 per centover last year, whileapartments in popularbuildings are flat on the year.

LagosCommissionerlists challengesof mass housing

Lagos StateCommissioner for

Housing, Bosun Jeje, hasidentified the issue ofproject cost, standard ofjob delivery and timeconstraints as some of themain challenges of masshousing development inthis part of the world.

He stated this in Lagosat a forum for stakeholdersin the housing sectorrecently. “There theurgent need for us to findways of reducing cost,maintain standard, buildfunctional and sustainablestructures with dignifyingaesthetic and finishing, yetdeliver within the shortestpossible time,” he said.

Jeje stressed that manycountries have putconsiderable efforts intothe optimisation of theconstruction industry,ranging from reduction ofenergy consumption to thelesser use of materials andlabours, all of which areaimed at reducing thecosts as well as time ofconstruction.

•Housing development like this require intervention funding

RSL extendscharity to lessprivilegedBy EBUN SESSOU

Resorts Savings andLoans Plc has

expressed readiness toalways cater for the lessprivileged in the society inways that will put smile ontheir faces.

Managing Director of themortgage bank, Mr.Abimola Olayinka, statedthis when the bank paid acourtesy visit to LittleSaints Orphanage and theLagos State Old PeopleHomes in LancasterAvenue Sabo Yaba, Lagos.He said the move is one ofthe firm’s ways ofpromoting corporate socialresponsibility, adding thatthe visit was a show of lovefor people who needed tobe showed love. “There isa need for us as a bank toshow love and care forpeople who don’t have theprivilege that we have.Our visit was more of asolidarity visit and a showof our love for people whoneeded to be showed love.RSL is committed topromoting shelter forNigerians.”

STORIES BY YINKAKOLAWOLE


Insurance

How the CPS is brewing cold war How the CPS is brewing cold war How the CPS is brewing cold war How the CPS is brewing cold war How the CPS is brewing cold warbebebebebetween insurertween insurertween insurertween insurertween insurers and PFOss and PFOss and PFOss and PFOss and PFOs

Insurance companies haveentered the pensionbusiness with some level ofaggression; however,stakeholders are warningthat the CPS should behandled with caution if itmust survive

By ROSEMARY ONUOHA

The Contributory PensionScheme, CPS,

introduced by the PensionReform Act, PRA, 2004,seeks amongst others toensure that every workerreceives his retirementbenefits as and when due.Accordingly, the Actrequires a RetirementSavings Account, RSA,holder upon retirement toaccess the balance of hisRSA through programmedwithdrawal or throughannuity.

The programmedwithdrawal pays pensionover an expected life spanwhile annuity pays pensionfor life. An annuity for lifecan be purchased from a lifeinsurance companylicensed by the NationalInsurance Commission,NAICOM, with monthly orquarterly payments. Inother words, annuity is aregular income receivedfrom an insurance companyin consideration forpayment of premium.

Whereas the PensionFund Operators, PFOs,have commencedprogrammed withdrawalsince 2005, the insurancecompanies only commencedannuity programme in2010.

However, with theentrance of insurers into thepension market, there is astiff competition for whowill control a larger chunkof the market with fears thatthe insurance companiesare not playing fair. Theinsurance sector is knownfor its stiff and cut throatcompetitive businessenvironment, with highlevel unprofessionalism justto get business at all cost.It is with such knowledgein mind that operators inthe pension sector havecalled out to the NationalPension Commission,PenCom, and NAICOM toup their regulatorymechanisms so that the CPSdoes not die.

The competitionA major bone of contentionis the de-marketing bymarketers of both sectors,even as PFOs are accusinginsurers of a higher level ofde-marketing.Managing Director ofLeadway Pensure PFA,

Mrs. Ronke Adedeji said“The market is so large thatI am disturbed at thedesperation by ourmarketers in the field and itactually sends a wrongsignal to customers. I havehad customers come to meworried of the desperationand aggression thatmarketers have shown themand I think the desperationis more on the insuranceside because the PFAsalready started the productand we are at a position ofcomfort until the insurancecompanies joined us andthe desperation is really acause for concern.”

While stating thatinsurance marketerspromise outrageous offers tocustomers, Adedeji said “Ihave heard of commissionsthat are so large and some

people say that theadditional lump sum theyare offered is actually theinsurance agents sharingtheir commission.”

Also reacting to theallegation that insurancecompanies promise to giveloans to retirees if theypatronise them, Adedejisaid “On the issue of loans,my thinking is that it will beillegal to offer loans basedon someone’s pension. TheActs actually prohibits usingyour pension fund as creditfor a loan.”

Managing Director ofPension Alliance Limited,Mr. Dave Uduanu also saidthat it is illegal to grantloans on retirement benefits.“The law says you cannotgrant loan on retirementbenefits, so whether it iswarehoused with pension

fund administrators orinsurance companies, it iswrong. The regulatorshould go against thisdevelopment,” Uduanustated.

The way forward On the way forward,Adedeji said that some kindof regulation or guidanceshould go into commissionswhich insurance companiesgive to their agents. According to her, “There isneed to have a long termview of the market, weshould focus more onsustainability and buildingcredibility. Let’s not forgetthat there are people outthere who still believe thatthe scheme will not work, sowe don’t need to positionourselves in such a way thatwe let it fail.

Adedeji called onregulators of both sectors tocarry out joint inspectionwhen it comes to annuity,adding “So far bothregulators are not doing thatand I want to encouragethem to do joint inspection.”

She also called for thecreation of pensioncustodians to manageannuity saying, “When youhave a custodian what youhave done is that you have

given ownership or tied theassets to an independentbody. This body isindependent from thosewho manage the assets andso what you have done is re-assign the assets andseparated them from therisks that the managers maybe exposed to. This isNigeria and we have seenfinancial institutions comeand go and so it is importantfor us to put this additionalsafeguard into the industry.”

According to her, theregulators should employthe use of sanctions whereit becomes necessary.

For Uduanu, annuityfunds should be held bycustodians. “All pensionfunds, whether it isprogrammed withdrawal orannuity, should be held withcustodians. “If we want tosanitise the industry, it issomething that we have todo. It means that you cannotinvest the funds insomething that does notmake sense because theregulator will not allow youto that. The custodian willonly allow you to invest theassets in accordance withthe guideline,” Uduanusaid. Uduanu also said thatthe guideline on 25 per centadditional capital by ownersof pension fund custodiansshould be applied toinsurers.

He said “The banks thatown pension fundcustodians are now requiredto bring 25 per centadditional capital for thepension funds that are intheir custody, I don’t thinkthat there is such guidelinefor insurance companies.That is what solvencymargin is supposed toaddress. That is somethingthat restrains smallinsurance companies fromgoing to sell annuity. Sobetween PenCom andNAICOM, they should lookat it and review theguidelines accordingly.”

However on the insuranceside, Managing Director,Capital Express Assurance,Mrs. Bola Odukale, said “Iwould desire a situationwhere at some point in time,we are able to come to apoint where the issue ofpricing is looked into somuch so that we can havean environment wherepricing is safe and not asituation where one man iskilling the other.”

,

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•Remi Olowude, Chairman, NigerianInsurers Association

•Dave Uduanu, Chairman, PensionFund Operators

The market is so large that I amdisturbed at the desperation byour marketers in the field and itactually sends a wrong signal tocustomers. I have had customerscome to me worried of thedesperation and aggression thatmarketers have shown them


CMYK

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Agric

BRIEF

Post Harvest losses: Africa loses Africa loses Africa loses Africa loses Africa losesfood valued at $4b annuallyfood valued at $4b annuallyfood valued at $4b annuallyfood valued at $4b annuallyfood valued at $4b annually

FG to distributeflood-tolerant ricevarieties to farmers,says Seeds CouncilDG

The Federal Government willsoon start distributing flood-

tolerant rice varieties to farmers,says Mr Olusegun Olatokun,the acting Director-General ofthe National Agricultural SeedsCouncil (NASC).He said that the council wasworking closely with theInternational Rice ResearchInstitute (IRRI), Philippines, tofacilitate the distribution.We realised that, that floodactually dealt with peasantfarmers dastardly. That is wherewe now introduced this floodtolerant varieties that when youplant it, in case we nowexperience another flood, thatvariety can stay under water fortwo, three weeks.

“And when the flood recede,the thing comes back and stillproduce and yield quantity. Wewere able to link up withInternational Rice ResearchInstitute (IRRI) in Philippineand they helped us.

“We are still linking up withthem; we are even going tounderstudy their ownmanagement of that floodtolerant varieties.

BY JIMOH BABATUNDEwith agency reports

An international workshop onpost-harvest losses rose from

it meeting in Kenya last week witha report that Africa loses foodvalued at over USD 4 billion dollarsevery year as a result of post-harvest inefficiencies across thestaples agricultural value chain.Ms. Anne Mbaabu Director ofMarkets at the Alliance for a GreenRevolution in Africa (AGRA) calledon governments to urgently investin systems that will lead to a hugereduction in post-harvest lossesand increase income levels ofactors across various agriculturalvalue chains.

“Post-harvest losses significantlyendanger the livelihoods ofstakeholders across the value chainby reducing valuable incomes andprofitability,” Ms. Mbaabu said.“Research has shown that areduction of just one per cent inpost-harvest losses can lead to again of USD 40 million annually.Imagine the impact if we are toreduce the losses by just two percent,” she said.

Participants at the meetinghosted by AGRA, in partnershipwith Bill & Melinda GatesFoundation, agreed that post-harvest losses are a majorcontributor to food insecurity inAfrica and there is an urgent needto mitigate the negative impactsacross the agricultural value chain.They decried the fact that there isvery little data to demonstrate thereal impact of post-harvest losses

in Africa. AGRA President Jane Karuku

called on African governments totake bold actions towards reducingthe high level of post-harvestlosses across the continent notingthat value chain actors andparticularly small holder farmerswere losing potential incomesthrough systemic inefficiencies.

“If we are serious about breakingthe cycle of poverty, we mustdevelop efficient systems forensuring that the food we produceis properly stored, transported andmarketed,” she said. “At AGRA, weare keen to work with variouspartners to come out with viableapproaches to address this criticalissue because we would like to seethe emergence of more efficientvalue chains. This would ultimatelybenefit the smallholder farmer whois our primary focus.”

The workshop reviewed theoutcomes of the first phase of astudy that seeks to establish thelevels of post-harvest losses alongthe stages of the value chain in 11countries across Africa includingEthiopia, Ghana, Kenya, Malawi,Mozambique, Zambia, Tanzania,Burkina Faso, Nigeria, Ugandaand Mali. The study targetsvarious staple crops includingmaize, rice, cassava, sweetpotatoes, sorghum, millet andgrain legumes such as cowpeas,soybeans, groundnuts and beans.

The study seeks to determine thestatus of post-harvest losses andstorage at various levels includingthe farmer level, aggregationcenters and in grain traders’stores. It seeks to determine themajor factors that cause post-

harvest losses, identify local post-harvest management practices andcome up with recommendation forimproving storage structures.

The participants discussed themethodological challenges ofcollecting reliable and comparabledata on the magnitude to post-harvest losses and the differentfactors contributing to them.Participants called for moreharmonized data collectionmethodologies to ensure thatcomparable losses of quality,quantity and economic losses.

“ We need stronger inter-organizational collaboration tobenchmark current approachesand ensure more reliableestimation of post-harvest losses inthe continent,” Dr Irene S. Egyir,the lead Researcher for the studysaid. “At the moment, though thereare many studies available, thelack of a standard methodologyfrom country to country makes itdifficult to compare the date anddraw conclusion.”

Meanwhile, Malawi’s PrincipalSecretary for Gender, Dr. MaryShawa has said that Africaurgently needs to find ways ofscaling up the involvement ofwomen in various agriculturalvalue chains if the continent is toreduce poverty among itssmallholder farmers.

Speaking at an internationalconference on Gender in Lilongwe,Dr. Shawa said that the Africanagriculture sector can only achieveits full potential if the importantrole played by women inagricultural value chains wasacknowledged, appreciated andsupported.

L-R—Dr Kenton Dashiell, Deputy Director General, Partnership and Capacity Development (IITA); Godwin Atser,Communication Officer (IITA); and Professor Timothy Olagbemiro, Vice Chancellor of Bowen University during acourtesy visit to IITA in Ibadan. Bowen University presented a plaque in recognition of IITA’s support to the university.

FAO Food PriceIndex remainsunchanged inJanuary

The FAO Food Price Indexheld steady at 210 points in

January 2013 after threestraight months of decline.Increases in oil and fats pricesoffset lower cereals and sugarquotations while dairy andmeat values remainedsubstantially unchanged. Thepause in the Index’s declinetallies with a significant upwardrevision in FAO’s latest forecastfor 2012 world cerealproduction. This is nowestimated at 2 302 milliontonnes - 20 million tonnes upon December’s forecast. FAO’smonthly Cereals Supply andDemand Brief noted that therevision mostly reflectsadjustments to maizeproduction estimates in China,North America and theEuropean CIS countries. Buteven at the new level, globalcereal output would still be 2percent down on the 2011record crop. Early prospects for2013 cereal production point toincreased world wheat output.


“Destiny is not a matter ofchance; it is a matter ofchoice. It is not a thing to bewaited for; it is a thing to beachieved”. William JenningBryan, 1860-1925.(VANGUARD BOOK OFQUOTATIONS p 38).

From the first annualNigerian Economic

Summit Group, introduced byChief Ernest Shonekan, in1992, till today, the complexissues summarized asdevelopment had been on thefront of the national agenda.Development, apart fromleading to improvedeconomic, social, politicaland personal welfare wasexpected to lead Nigeriatowards what many hadregarded as our own manifestdestiny. Often stated but notyet realized, was the notionthat it would make ourcountry the largest economyin Africa and truly makeNigeria the giant of Africa.Several reasons have beenoffered to explain the gapbetween the dream and thereality. Out of all the multiplecauses of our lowdevelopment, despite ouruniversally acknowledgedpotential, perhaps, the singlemost important is the changefrom collective cake baking tocake sharing. Permit me to usean analogy which shoulddrive the point home,especially at this time whenwe are embarking onreviewing the 1999constitution – which like allthe military imposedconstitutions, had merelyaided in fostering our under-development.

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Nigeria’s arresNigeria’s arresNigeria’s arresNigeria’s arresNigeria’s arresttttted deed deed deed deed developmentvelopmentvelopmentvelopmentvelopment;;;;;frfrfrfrfrom Baking tom Baking tom Baking tom Baking tom Baking to sharing cako sharing cako sharing cako sharing cako sharing cakeeeee

Imagine, if you can, a set ofkids to whose fathers hadrolled up their sleeves andworked, tirelessly, to raisethem well; gave them the besteducation at the time; taughtthem the lessons of thrift andhard and differentiated work;inculcated the spirit of self-reliance; and, above all, left asociety where crime did notpay. Each household (readregion) competed with theothers for progress becausetheirs was not a society where“Wealth without work”(apologies to Ghandi) wascelebrated. During the era,their communities weregrowing as far as any in theworld. Poverty was negligiblebecause idleness wasabhorred; there was dignity oflabour; a university professorwas as highly paid as aPermanent Secretary andthere was near food self-sufficiency. That was Nigeriauntil 1966. There was truefederalism anchored on theprinciple of derivation. TheWestern Region, which thenincluded Edo and Delta,established agriculturalresearch institutes to diversifyits export base and to produceintermediate products. TheEastern Region went all outto find markets for its coal. TheNorth was famous for the

groundnut pyramids and forleather tanning – amongother things. Agriculture wastruly the backbone of theNigerian economy and sinceeach region’s revenue was afunction of how much itearned, cake sharing was outof question. The first militarycoup, apart from the lastingdamage it did to our corporatepolitical existence, alsointroduced centralization of

revenue and “cake sharing”.That, by itself, would haveretarded our growth and marchtowards economic greatness.The discovery of crude oil inlarge volumes exacerbated theproblem such that, today, onlya few of the states created fromthe balkanized regions cansurvive on their own internallygenerated revenue. Thesudden influx on huge oilrevenue had blindedsuccessive military regimes tothe dangers ahead as wemoved from three regions tothirty-six states – about thirtyof which depend on thefederally allocation revenue.Our transition from cakebakers, a productive group, tocake sharers, a consumingcollection of beggar states, hadall but guaranteed thateconomic progress would beretarded and the struggle forpolitical supremacy willintensify. Unfortunately, it hasnot yet dawned on us thatmurderous political strugglescan never allow the sort ofcooperation which canpromote rapid economicgrowth. Bad politics is killingthe nation more than anythingelse.

In a nation of bakers, whereeverybody is, to a great extent,self-reliant, there is very littlefear of being “cheated”; in a

nation of sharers, thesuspicion is pervasive.Indeed, it is inevitable thatmore for A means less for B,C, D etc. Furthermore, it iseven killing all the incentiveto be self-reliant. Let meagain give an example.

South Africa is blessed withlarge deposits of coal; so isNigeria. On the eve of ourindependence in 1960, bothSouth Africa and Nigeriagenerated a great deal oftheir power from coal. Today,about 15% of South Africanpower supply, now about45,000MW or 6,750 MWcomes from coal. That is2,500MW more than Nigeriagenerates from her hydro andgas fired power plants. TheJonathan government whichhad been asking us to clap,for providing 4,250 MW, willprobably declare a publicholiday and expect us todance in the streets if theyever achieve 6,750 MW. Yet,power generation in Nigeriastarted with coal. But, nosooner did oil revenuebecome the mainstay of oureconomy than we abandonedcoal powered plants. Insteadof learning about newdevelopments that couldhave made coal an option forgenerating power, wescrapped it.

Business & Economy

R-wells Media andAdvertising Company

Limited has announced plansfor its Mother ’s Daycelebration, with a view tomaking mothers understandtheir place in the society.

The company, producers ofHealth Monitor, MyTomorrow Young Scholars andTripple M TV programme,said that the fiesta tagged“Celebrating Motherhood” isscheduled to hold on March9, 2013, at the NationalTheatre, Igamu Lagos, whereissues concerning mother ’swould be discussed. Activitieslined up for the day include:Memories of my mother;Women empowerment;Health Monitor workshop;Mothers in nation building;outstanding mothersrecognition, among others.

Slow down in MfB Associations' activitiesActivities in various

micrfinance banks'associations at the state andzonal level have droppedsince the beginning of theyear, National Association ofMicrofinance Banks (NAMB)said.

NAMB attributed theslowdown to apprehension onthe part of operators asregards the consequence ofthe pronouncement of Other

RRRRR-wells announces mother’s da-wells announces mother’s da-wells announces mother’s da-wells announces mother’s da-wells announces mother’s day celebry celebry celebry celebry celebration planation planation planation planation planSpeaking at the mother’s

day fiesta media parley, toformally announce the event,Managing Director/ ChiefExecutive of R-wells, MrsJibe Ologeh explained thatthe celebration, prompted bymother ’s world segment, aprogramme by R-wells is toshow that mothers are not justordinary people butextraordinary people.

Ologeh said, “Over theyears, Mothers were beingcelebrated in churches inaccordance with certainbeliefs, norms and culturalheritage and other religiousplaces, but we have come outto say no, let’s celebratemothers in a very well orderof inclination. However, theroles of mothers go beyondthe Churches, thus, we arecelebrating mothers across all

religion. Mothers DayCelebration has beenuniversally accepted as a daywhen Mothers are celebratedand appreciated for theirunflinching role in the family,society and nation at large.”

She however, urged thegovernment to participate byassisting the initiative withfund, just as she beckoned onwell meaning Nigerians forsponsorship.

General Manager, R-wells,

Mr. Robie Ukah said, “Thereis hope for mothers inNigeria and that is why weare celebrating, the essenceof this programme is to let themothers know who they are.

Financial and SupervisionInstitutions Department,OFSID.

It would be recalled that theapex regulator gave December31, 2012 as deadline for allMfBs operating in the nationto recapitalize to remain Unit,State or National microfinanceBank. Accordingly, NAMBsaid, “MFBs are apprehensivebecause of the pronouncementof the OFSID. They even fail

in sending their staff for theCertification programme andthey are not paying theirannual dues. StateGovernments are beginningto withdraw their patronageof MFBs. Branch closure willreduce the reach out toextend financial services tothe poor and Underbanked inNigeria. This will furthercompound the crime rate inthe country.”

In a nation ofbakers, whereeverybody is,to a greatextent, self-reliant, there isvery little fearof being“cheated”; in anation ofsharers, thesuspicion ispervasive.Indeed, it isinevitable thatmore for Ameans less forB, C, D


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BRIEFS

Mr. Osagie Ogunbor,Corporate Affairs

Manager of Intel Corporation,West Africa in this interviewreveals why the firm is trainingfresh graduates on technologyand entrepreneurship to enablethem set up businesses ratherthan seek for jobs as part of itsCorporate Social Responsibility(CSR). Princewill Ekwujurureports.

Why is Intel engaging in thistraining venture?As you can see from today’straining, this is a bitdifferent from what Intel istypically known for.Before now, Intel wasengaged with training ofteachers. Indeed in thelast five years, we havetrained over a hundredthousand teachers inNigeria and over Ten millionglobally. So that used to beour focus, but now, we arebeginning to see that the realityon ground is that there areother areas that need attention.In Nigeria, you know there isa huge problem ofunemployment, there is a hugeproblem of social restiveness.We believe that the root causeof some of these things is thefact that youths are not properlyequipped with the right skillsespecially in the use oftechnology in the 21st centuryworkplace and businessenvironment.

We therefore thought it wasa worthwhile decision to useour platform to provide somesort of Technology andEntrepreneurial Training forthese youths who are justcoming out of college and that’show we came about the trainingfor youth corps members. Thisis a pilot scheme starting inLagos and over the months andyears it is going to become aNational programme.

From what you have just said,there appears to berecognition of the critical rolein the case of technology, howimportant is entrepreneurshipin this phase? What do youthink the training will bring tothe nation particularly?Well typically,entrepreneurship is everythingto them at this moment. Theyare coming out of Universitiesand they are at a critical pointin life where they have to takelife changing decisions; Arethey going to look for jobs, Arethey going to set up their ownbusinesses, What are theygoing to do? Now we know thathundreds of thousands ofgraduates are coming out everyyear. We also know that we havevery few vacancies and jobopportunities for them. Whatthat means therefore is that year

Valentine:Largest card tobe displayed atBon ‘MarcheFestival’

This year’s edition ofStrands Events will

wear a new look thisseason as it is alsodubbed “Bon MarcheFairstival”with the largestValentine card in display.

As a tradition withrepute, the Student TradeFair which runs its 8th

edition seeks to actualizethe vision of building aneconomy of endlessopportunities. Speaking,Alafia Gbadebo,Managing Director,Strands Nigeria Limitedorganizers of the BonMarche Fairstival, saidthe defining purpose ofBon Marche Fairstival ishelping in creatingeconomic opportunity forbusinesses to thrive. Bypromoting trade andinvestment we arepromoting prosperity anda better world.

In understanding therole of Youth aspacesetters in nationdevelopment, the need toevolve a platform such asthis is inevitable.

WWWWWe need more ye need more ye need more ye need more ye need more youth entrepreneurouth entrepreneurouth entrepreneurouth entrepreneurouth entrepreneursssssin Nigeriain Nigeriain Nigeriain Nigeriain Nigeria — Intel

In those days, when you start ajob, you are given pen and paperand files, today, when you start anew job, you are given a computereither a desktop or a laptop

in, year out, you are havinghundreds of thousands ofgraduates who have nothing todo. So we are saying to themthat rather than have a fixationon looking for jobs, there is anoption to actually set up theirown business, to be anemployer of labour rather thanbeing a figure looking forwork. So that’s the first option.The second option is that evenwhen you decide to work in aformal environment, you needto be equipped to be able tosurvive in that formalenvironment. In those days,when you start a job, you aregiven pen and paper and files,today, when you start a newjob, you are given a computereither a desktop or a laptop.Today’s graduates have to betechnologically equipped to beable to function in that kind ofworkspace. So it means thateven if you want to work, if youdon’t have the kind oftechnological training whichwe are giving now, you cannotfit in. If you were taught in yourUniversity using analoguemethod, sitting down and

taking notes, you come to theoffice and you don’t know howto boot a computer, you will notbe employable and that’s acritical problem. We’ve gotgraduates who are notemployable. So what we aredoing is equipping them to beone, employable and two,Should they not want to work,have the necessary skills to beable to set up businesses andrun it.

We have got loads of themwho have Uncles and relativeswho can actually give themseed capital to start-upbusinesses. But again, do theyhave the basic know-how to runthese businesses profitably sothat they themselves are ableto take care of themselves andeven employ more people, theeconomy gets better for it, morepeople are employed, taxincome increases forgovernment and the economyis better for it.

Sir, you said at the beginningthat the training is to come inphases, my question is willthere be an end like a specific

year when all these technologyand entrepreneurship trainingwill come to a halt? What is thetarget? In terms of number,how many students are welooking at?

We are just starting, so wecan’t be talking of stopping. Ourfocus is not really the numbers.Our focus is on the impact. Nowwe’ve started in Lagos, we aregoing to go from Lagos to theentire South West and then tothe South East, and then wescale up. What we are doing isto have a pool of mastertrainers, Senior Master Trainerswho have been trained acrossthe country. So, as we scale tothose parts of the country, thosemaster trainers will conduct thetraining in their own locality. Soultimately, our target is to havean Intel technology &Entrepreneurship Trainer, inevery State of the Federationwhere there is National YouthService.

Will this training be on specificareas or different areas?Basically, the curriculum forentrepreneurship is basic. It’snot an MBA as such what it doesis to teach you the rudiments ofsetting up a business. Whatyou need to do before settingup a business, what are theempirical meters that you mustlook into, what informs thechoice of business you want todo? You know people just comeout of school and say ‘well Ithink that baking is somethingI want to go into and it’s mypassion and I must go into it.But in their locality, it might notbe the most profitable business.So there are empirical indicesto determine that. What is thecompetition for that business inyour neighbourhood? What skilldo you have, what is yourunique selling point, what mustyou put in place so that you canbecome competitive? These arethe basic skills we are teachingpeople and it’s not like theyprobably don’t know, but it’s justthat we are bringing it to theirconsciousness now. And whenyou bring it to theirconsciousness, they begin torealize it. We have entered intopartnerships with relevantNGO’s to enter these corpsmembers into a business plancompetition so when they arethrough with it, the finalproduct of this training is thateach person gets a chance toproduce a business plan of theirown business. They submit thebusiness plan into the contestand 1,200 people stand achance of up to winning 10mnaira each, courtesy of theFederal Government.

So first of all, you are beingtrained in Technology andEntrepreneurship, you thenhave a chance to even get thecapital to start the business.

Mr. Osagie Ogunbor

Niche IMC JoinsICOM+INNetwork

Niche IMC, oneN i g e r i a ’ s

integrated marketingcommunications firmshas joined the fastgrowing ICOM+IN, aglobal network ofindependent advertisingand marketingc o m m u n i c a t i o n sagencies.

According toinformation from theglobal network, NicheIMC becomes the ninthagency member of therapidly growingICOM+IN AfricaNetwork, joiningagencies in Angola,Ghana, Ivory Coast,Mozambique, SouthAfrica, Tanzania andZambia. With theappointment, Niche IMC,Lagos, will represent thenetwork’s businesses andinterests in Nigeria.

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Tax Issue


BRIEFS Self assessment can driveSelf assessment can driveSelf assessment can driveSelf assessment can driveSelf assessment can drivetttttax grax grax grax grax growth in 20owth in 20owth in 20owth in 20owth in 201111133333BY FRANK OBARO

Many tax jurisdictionsnow rely on self-

assessment as the majormeans of tax collection; it hasbecome a tax modernadministration trend. Indeedit is now a measure of howup-to-date a tax authority is.By way of definition, it is a taxregime whereby the taxpayeris granted the right, by law,to compute his own taxliability, pays the tax due (ata designated bank, as is thecase in Nigeria) and producesevidence of tax paid to the TaxOffice, at the time of filing taxreturns, on due date. On thepart of the tax authority, itaccepts the tax returns asfiled, subject to completeness,and carry out audit in duecourse. Very much unlike anadministrative assessmentwere the tax authority raisesan assessment where ataxpayer has failed to filereturns and pay taxes due onor before the due date orwhere there is anunderstatement of tax in thereturns filed.

With the taxpayer ’sassumption of the role ofassessing self, an obligationarises for the tax authority toensure that the taxpayerunderstands the proceduresinvolved in tax administrationand how to compute taxliabilities and complete taxreturns (if the option is self-service). In addition totaxpayer enablement, it is theresponsibility of the taxauthority to ensurecompliance with all taxadministration processesespecially accuracy ofdeclarations made and thetimeliness of tax returns.

In Nigeria, the FederalInland Revenue Service(FIRS) introduced the selfassessment regime in 1992following the enactment of theappropriate law in 1991. TheFIRS Board in exercise of thepowers conferred on it bySection 61 of the FederalInland Revenue Service(Establishment) Act 2007 withthe approval of the Ministerof Finance gazetted aRegulation dated 19December 2011 modifying theprocesses and procedures forself assessment returns. TheRegulations cover tax returnsunder the Companies IncomeTax Act (CITA), Education TaxAct (ETA), Petroleum ProfitTax Act (PPTA), PersonalIncome Tax Act (PITA),National InformationTechnology Development Act(NITDA), and Value AddedTax Act (VATA).

However the method hasnot been as successful asenvisaged. Many will arguethat risk based audit which isa major feature of selfassessment has not been notbeen fully optimized. Riskbased audit assist in riskidentification, analysis,assessment, evaluation andprioritization, with the pre-determined risk ratios drawnfrom a risk framework, everytax return is subjected to riskanalysis and assessment. Thisin itself is a departure fromthe government assessment ofbest of judgement where timeand capacity impeded 100%audit. Under risk based audit,resources are applied to areasof risk in the order of theweight attached.

Fundamentally, automationof the filing process willencourage taxpayers to filetheir returns independentlyinstead of using the outdatedadministrative assessment orbest of judgement. In thisregard the Integrated TaxAdministration System (ITAS)project being undertaken bythe FIRS will play a key role.FIRS will need to fully exploittechnology to endearefficiency in the process of

Self-Assessment.Also for the benefits of Self

Assessment to be fullyoptimized a more robustmechanism wherebycompliance checks areconducted through risk basedcase selection for audit; Inwhich case, all Tax returnshave equal chance of beingselected for audit. Thisapproach is a demonstrationof transparency in taxadministration and isexpected to encourage selfdisclosure and clearerdisclosure benchmarks alsoneed be to put in place.Another key driver will be tohave a strong Audit andCompliance department thatcan ensure the validity ofdisclosure.

Using the Australian TaxOffice (ATO) as a global casestudy of the self-assessmentsystem, the claims a taxpayermakes in their tax return areaccepted by the (ATO),usually without adjustment,and an assessment notice isissued. Even though we mayinitially accept the tax return,the return may still be subjectto further review.

To ensure the integrity of thetax system, the law provides

the ATO with a period whereit may review a return (andmake sure all income has beenincluded) and may increase ordecrease the amount of taxpayable. The ATO has powersto amend an assessment upto two years (or four years fortaxpayers with more complextax affairs) after tax becomedue and payable under theassessment. Where anti-avoidance provisions apply,the period is four years. Wherethe avoidance is due to fraudor evasion, there is no timelimit on amending theassessment. If the FIRS canpush such laws through it willcertainly ensure and endearvoluntary and honest filing ofreturns.

Generally speaking, theadoption of self assessmentprinciples reflects a desire tomove away from in-houseadministrative assessmentprocedures in favour of morecomprehensive and targetedapproaches to providing helpand assistance to taxpayers,and to the systemicverification of reported taxliabilities through risk-baseddesk and field audits andcomputerized matching ofincome reports. In countrieswhere self-assessment hasbeen adopted, it has generallybeen initiated with theobjective of improving overallcompliance with the laws andincreasing operationalefficiency by collection of taxrevenue on time, streamliningthe system of returnsprocessing and reducing theincidence of disputedassessments.

S e l f - a s s e s s m e n tultimately reduces

administrative costs for taxauthorities and aided bymodern technology, mosteconomies have adopted theprinciple to drive down costand ensure timeliness infilling return and Nigeria canbenefit from this trendingrevenue collection system.Self-Assessment also reducesthe discretionary powers oftax officials and reducesopportunities for corruption.However, self-assessmentneeds to be properlyregulated and implemented,with transparent rules, anautomated reporting process,and penalties fornoncompliance and riskbased assessment proceduresfor audit procedures.

Also the FIRS need toembark on mediasensitization campaigns toachieve a change inbehaviour of both taxpayersand tax officials in favour of ataxpaying culture throughstrict application of sanctions.This way non-compliance willbe dealt with timely and willbe deterred. Internal andexternal stakeholders’engagements will key inimplementation and successof Self-Assessment regime.

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Virgin Atlanticon offensive asDelta deal endswildernessyears

Virgin AtlanticAirways Ltd. will go

on the offensive undernew Chief ExecutiveOfficer Craig Kreeger asan equity deal with DeltaAir Lines Inc. gives it thebacking to take on biggerrivals, outgoing CEOSteve Ridgway said.Kreeger, a 53-year-oldAmerican, was appointedto the top position on Jan.8, four weeks after Deltaagreed to pay SingaporeAirlines Ltd. $360 millionfor a 49 percent stake inVirgin, which is majorityowned by billionaireRichard Branson.

“There’s now ashareholder with asignificant strategicinterest in what VirginAtlantic brings them,”Ridgway said in aninterview. “We’ve been infighting mode for the lastfour to five years. Thisshould put us back on agrowth trajectory.” Thefirst task for Kreeger, whotook over on Feb. 1, willbe to expedite the two-month old joint ventureagreement with Delta,Ridgway said. The newCEO’s 27 years at AMRCorp., where he helpedcoordinate a joint venturebetween AmericanAirlines and BA, shouldhelp him deliver on thenew tie-up, he said.

“He brings a wealth ofexperience at American indealing and working withBritish Airways,”Ridgway said yesterdayin London. “That’s whatwe need because we’vegot to put together thisNorth Atlantic jointventure now and there isa set of skills there thatVirgin needs to have.”Delta and Virgin areseeking antitrustimmunity that would letthem coordinateschedules and pricingand share costs and salesfrom 31 joint-ventureflights over the Atlanticregardless of whose planeoperates the route.

They also will offerreciprocal frequent-flierbenefits and use of airportlounges.

The deal gives Delta aplatform at London

Generally speaking, the adoption ofself assessment principles reflects adesire to move away from in-houseadministrative assessment proceduresin favour of more comprehensive andtargeted approaches


International Business News

BRIEFS

L-r: Emmanuel Ibeziako, Publisher/ Editor-in-chief of the Businessmen JournalPresenting the Businessmen Journal Night of 100 Stars Award Plaque to Mr. AustineEenajemo-Isire, Managing Director/CEO, Standard Alliance Life Assurance Limited, aSubsidiary of the Standard Alliance Group While Mr. Nelson Egboboh, Head, CorporateCommunications, Standard Alliance Group at S.A. Life Assurance Headquarters inVictoria Island, Lagos Recently.

Brent crude, headed for afourth weekly advance,

climbed to a nine-month highin London after stronger-than-expected trade data fromChina, the world’s second-biggest user. Futures rose tomore than $118 a barrel for thefirst time since May 3,boosting their premium toWest Texas Intermediate(WTI) for an eighth day to themost in almost two months.China’s exports climbed 25percent in January from a yearearlier and crude importsincreased to the highest levelin eight months, customsfigures showed. Oil marketswill “remain tight” in the firstquarter and may push pricesabove its forecasts, GoldmanSachs Group Inc. said.

“The numbers out of Chinaare good,” said Nic Brown,head of commodity researchat Natixis SA in London, whoforecasts that Brent willaverage $107.40 this year.“China appears to besignificantly stronger thaneven we were expecting. Thisis a clear upside risk for oilprices.” Brent for Marchsettlement advanced as muchas $1.17, or 1 percent, to$118.41 a barrel on theLondon-based ICE FuturesEurope exchange and was at$118.26 at 11:51 a.m. localtime. Volumes were 41 percent

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more than the 100-dayaverage. The Europeanbenchmark grade’s premiumto WTI futures widened to asmuch as $22.05, the mostsince Dec. 14.

Crude for March delivery onthe New York Mercantile

Exchange added 44 cents to$96.27 a barrel in electronictrading. The volume of allfutures traded was in line withthe 100-day average. Pricesare down 1.5 percent thisweek, after advancing 14percent over the prior eight

Stock index futures were littlechanged last Friday following

economic data out of China andGermany, though the benchmark S&Pindex appeared to remain on track forits first weekly drop of the year. Datashowed Chinese exports grew 25 percent in January from a year earlierversus a forecast of 17 per cent in aReuters poll, while imports climbed28.8 per cent, highlighting robustdomestic demand. German datashowed the country’s surplus in 2012was at its second highest in more than60 years, in an indication of theunderlying strength of Europe’sbiggest economy.

Comments from European CentralBank President Mario Draghi aboutthe strength of the euro has kindledconcern about the euro zone economyand sent U.S. equities lower. U.S.economic data expected on Fridayincludes December international tradeand wholesale inventories forDecember. Economists in a Reuters poll

Stock futures little changed afterChina, German data

expect a trade deficit of $46.0 billionversus a $48.7 billion deficit inNovember while inventories areexpected to be up 0.4 percent versusa 0.6 percent increase in November.

The S&P 500 has risen for fivestraight weeks and is up 5.8 per centfor the year. Its advance was helpedby legislators in Washington avertinga series of automatic spending cutsand tax hikes earlier in the year, aswell as better-than-expected corporateearnings and data that pointed tomodest economic improvement but noimmediate change in the FederalReserve’s stimulus plans. The indexhas found it tougher to climb in recentdays as it hovers near five-year highs.S&P 500 futures rose 0.9 point andwere slightly above fair value, aformula that evaluates pricing bytaking into account interest rates,dividends and time to expiration onthe contract. Dow Jones industrialaverage futures lost 13 points, andNasdaq 100 futures added 4.5 points.

weeks. The Brent-WTIdifferential has grown sinceEnterprise Product PartnersLP said Jan. 31 that capacitywill be limited until late 2013on its Seaway pipeline to theGulf Coast from Cushing,Oklahoma, the delivery pointfor New York crude. Brent’sadvance to more than $117 abarrel has been driven byimproving fundamentalsrather than increasing riskpremium, Stefan Wieler, ananalyst with Goldman Sachsin New York, said in a reportdated yesterday.

Prices may exceed thebank’s forecasts, which

for Brent futures are at $110 abarrel over the next three-to-six months, and at $105 in 12months. For WTI, Goldmanprojects a level of $102.50 inthree months, $105 in six and$97 in 12 months. Chinabought 24.87 million metrictons of crude more than itexported last month,according to data publishedon the website of the Beijing-based General Administrationof Customs. That’s equivalentto 5.88 million barrels a day,the most since May, datacompiled by Bloomberg show.

Brent, the benchmark pricefor more than half the world’soil, extended gains amidsigns of increased tension inthe Middle East and reducedsupplies by Saudi Arabia. Iranwon’t be coerced into holdingdirect negotiations with theU.S. about its nuclearprogram while beingthreatened andsimultaneously squeezed byWestern sanctions, SupremeLeader Ayatollah AliKhamenei said yesterday.

EU leaders toagree push forU.S. trade deal

Europe’s leaders willagree on Friday to

push for a free-trade pactwith the United States,according to a draft jointstatement, putting theonus on the WhiteHouse to respond to aproposal that wouldencompass half theworld’s economic output.Major exportersGermany and Britainappear to have wonsupport from the rest ofthe European Union at asummit in Brussels toreach a deal withWashington that manyleaders hope will helpEurope pull out of itsbanking and debt crises.

According to the draftof the final summitstatement obtained byReuters, the EuropeanUnion will give “itssupport for acomprehensive tradeagreement” with theUnited States. “All effortsshould be devoted topursuing agreementswith key partners,” EUleaders will say, puttingthe United States at thetop of a long listincluding Japan andCanada. The EUleaders’ statement raisesexpectations that U.S.President Barack Obamamay endorse theinitiative next Tuesday inhis annual State of theUnion speech, whichpresidents traditionallyuse to lay out theirpriorities for the year.

Obama and EU leaderstasked their trade chiefsin 2011 to look atwhether it was feasible toagree a deal to furtherintegrate the two blocsthat already have lowtariffs. A U.S.-EU draftproposal drawn up byEU Trade CommissionerKarel De Gucht and U.S.Trade RepresentativeRon Kirk is essentiallyready. De Gucht, whowent to Washington thisweek, has given strongsignals that there isenough common groundto go ahead withnegotiations.

Talks could start inmonths, and while suchnegotiations arenotoriously slow, bothsides appear to want toagree on an accordquickly, possibly by theend of 2014.


CMYK

Omoh Gabriel - Group Business EditorBabajide Komolafe - Acting Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital MarketYinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentMichael Eboh - Capital Market ReporterOscarline Onwuemenyi - Energy ReporterFranklin Alli - Industry/Agric. ReporterAmaka Abayomi - Money market ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/MarketingNaomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

Email:[email protected], [email protected] page:www.lesleba.com/blog2Website: www.lesleba.com

Tel:0817 002 3569

Business & Economy

Insurance:Insurance:Insurance:Insurance:Insurance: No premium no claim policy also applies to governments' MDAsBY GABRIEL OMOH,GROUP BUSINESSEDITOR & EMMA UJAH,ABUJA BUREAU CHIEF

The new insurance policythat premium payment

must be up-to-date beforeclaims could be paid ALSOapplies to governmentMinistries Departments andAgencies, MDAs, theNational InsuranceCommission has said.

Speaking at the one-dayseminar for Business Editorsin Ilorin, Kwara state capitallast week, the Commissionerof Insurance, Mr. FolaDaniel, insisted that the newpolicy applied to all insuranceholders, be they public orprivate sector individuals andorganizations.

According to him, under theimplementation of the

provisions of Section 50 (1)of the Insurance Act 2003,“the receipt of insurancepremium shall be a conditionprecedent to a valid contractof insurance and there shallbe no cover in respect of aninsurance risk unless thepremium is paid in advance”.

“The policy applies to all.

Those who default inpayment of premium cannotenjoy claims. It does notwork like that. In the pastthere were issues of peoplemaking claims even whenthey were not up-to-date intheir payment of premiums.

“In fact in the next one weekor so, we will issue a circularto all governmentsorganization on theapplication of the newpolicy. Some people haveraised concerns howgovernment agencies can

make premium paymentsregularly and completely atthe beginning of each year butwe are sure they can workround it by making availableor setting such funds asideearly enough in order not todefault”.

The strict application of theprovisions of that sectionstarted in January.

The NAICOM boss added

that the policy becamenecessary to know the truefinancial position of eachinsurance company, asaccording to him, there weresituations, in past, where itwas difficult to know the truepositions of some companiesowing to unpaid premiums bypolicy holders.

Mr. Daniel also said that theFinancial Inclusion initiativeof the President GoodluckJonathan administration

would receive a boost with theintroduction of the micro-insurance practice in thecountry.

According to him, only 1

per cent of Nigerians adultswere insured leaving thelarger population withoutany form of insurance policywhatsoever.

The recognition of theabysmal depth of

corruption in public office isprobably shared by alldiscerning citizens of thiscountry; consequently, somewell-meaning Nigerians haveprescribed the death penalty foranyone convicted of treasurylooting! The obviousprovocation of the recent slap-on-the-wrist punishment to acivil servant for stealing overN27bn of Police Pension Fundmay have prompted the call formore severe penalty!

In reality, it will probably beimpossible to find anyone, whohas served in any Legislaturein any part of the country whowill come away with cleanhands. The Legislators aretherefore unlikely to enact lawsthat would prescribe extendedprison terms or the deathpenalty for treasury looters.

Thus, rather than the publicfixation on the measure ofpunishment, it would probablybe more sensible for us toidentify and reduce thoseopportunities that wouldfacilitate corruption in publicoffice.

In response to thischallenge, we published anarticle with the above title inApril 2008; the followingexcerpts from that piece stillremain relevant if we truly wishto reduce the level of corruptionin Nigeria.

“Many years from now,historians may conclude thatthe most obvious definingfeature of public servants in thefirst nine years of the thirdRepublic was the art of ‘doublespeak’ or in plain language, thepenchant for insincerity anddeception.

“For example, in his firstterm in office, Obasanjo wastotally against any form ofconstitutional review andanyone who expressedsupport for constitutionalamendment was labelled atraitor and renegade. Thenation, however, witnessed atotal somersault when thesame Obasanjo suddenlybecame the senior apostle forconstitutional amendment solong as it accommodated theintroduction of a third term inoffice for the incumbent!

“Obasanjo’s administrationalso paid lip service to theadherence to rule of law…. Inreality, the former Presidentrode rough shod over any lawor judgment that was not inconsonance with his personalinterest….

“The prevailing level ofhypocrisy is probably mostglaring in the area ofgovernment’s declared war oncorruption. The series ofrevelations of the sordid andunpatriotic deals in the powersector; the mal-administrationof the Petroleum Trust Fund;the huge fraud associated withCOJA, the sale of undervaluedgovernment properties andcommon-wealth to cronies andparty stalwarts, etc; the list ofmalfeasance is open-ended,and at the end of the day, therecan only be one conclusion,

and that is, that the trustNigerians had in public officeholders was woefully betrayedand the forbearance of ourpeople became countenancedas foolishness.

“In focused economies,worldwide, the Central Bank isthe prime custodian of thenation’s wealth and treasury;the Central Bank is thus thebanker to government!

“Thus, if government and itsagencies did what is expedientand appropriate by placing itscash deposit with CBN,financial control and audit ofdisbursements by MDAs wouldnot only be facilitated, but alsobecome more transparent, asthe convenient instrument ofirrevocable standing paymentorder, ISPO – a system whichfacilitates treasury looting withthe conscious collaboration of

commercial banks, willbecome redundant. It wouldalso be impossible for publicofficers to collect up frontinterest on MDAs depositswith commercial banks!

“Similarly, the perennialproblem of excess liquidityinduced by the extendedcapacity of banks to injuriouslyexpand credit whenevermonthly allocations of thethree-tiers of government areall paid in naira will beassuaged as less nairadeposits will become availableto instigate the scourge ofexcess liquidity in the system.

“In the same vein, the CBNand Debt Management Officewould have no excuse tocondone unnecessary increasein the Nation’s indebtednessby borrowing back from thebanks, funds, which were

earlier deposited as nairaallocations to the three tiers ofthe government by the sameCBN!”

Instructively, however, itmay be more realistic to tacklethe problem of corruption byreducing whatever fuels theoppressive excess cash in thesystem. The church rat, forexample, remains lean andimpoverished because there isnot much to eat, while those ratsin a bakery will become obesebecause of excess food in theirhabitat!

We have ceaselessly indictedthe CBN’s substitution of nairaallocations for dollar revenue asthe major instigation of excessliquidity, and ultimately also,for the expansion of the pool ofslush funds; thus, theopportunities for blatanttreasury looting would besignificantly minimized, whenour dollar-derived revenue isshared with the instrument ofdollar certificates toconstitutional beneficiaries.

In other words, CBN’smonopoly of the foreignexchange market and theattendant product of systemiccash surplus is probably themajor feed-mill for corruptionfor public officers.

SAVE THE NAIRA, SAVE

NIGERIANS!

Banking of public funds, corruptionBanking of public funds, corruptionBanking of public funds, corruptionBanking of public funds, corruptionBanking of public funds, corruption& double speak!& double speak!& double speak!& double speak!& double speak!,

,For example, in his first termin office, Obasanjo was totallyagainst any form ofconstitutional review andanyone who expressedsupport for constitutionalamendment was labelled atraitor and renegade

financial vanguard february 11th 2013 edition

Documents

central bank of nigeriacbn

uba academy banking

low value accountslevel

low value accountand

customerwith uba plc

destructiveinflation

central bankleadership

categoryof account holders